As filed with the Securities and Exchange
Commission on December 6, 2023.
Registration No. 333-275224
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Allarity Therapeutics, Inc.
(Exact name of registrant as specified in its
charter)
Delaware | | 2834 | | 87-2147982 |
(State or other jurisdiction of
incorporation or organization) | | (Primary Standard Industrial
Classification Code Number) | | (I.R.S. Employer
Identification No.) |
24 School Street, 2nd Floor
Boston, MA 02108
Telephone: (401) 426-4664
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
James G. Cullem
Chief Executive Officer
c/o Allarity Therapeutics, Inc.
24 School Street, 2nd Floor
Boston, MA 02108
Telephone: (401) 426-4664
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Scott E. Bartel
Daniel B. Eng
Lewis Brisbois Bisgaard & Smith LLP
633 West 5th Street, Suite 4000
Los Angeles, CA 90071
(213) 358-6174 |
|
David E. Danovitch
Aaron M. Schleicher
Sullivan & Worcester LLP
1633 Broadway
New York, NY 10019
212-660-3060 |
Approximate date of commencement
of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. ☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☒ |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends
this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does
it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Preliminary Prospectus |
Subject
To Completion |
Dated
December 6, 2023 |
Up to 13,333,333 Shares of Common
Stock
Up to 13,333,333 Series A Common Warrants to
purchase up to 13,333,333 Shares of Common Stock
Up to 13,333,333 Series B Common Warrants to
purchase up to 13,333,333 Shares of Common Stock
Up to 13,333,333 Pre-Funded Warrants to purchase
up to 13,333,333 Shares of Common Stock
Up to 26,666,666 Shares of Common Stock Issuable
Upon Exercise of Series A and Series B Common Warrants
Up to 13,333,333 Shares of Common Stock Issuable
Upon Exercise of Pre-Funded Warrants
We are offering on a “reasonable
best efforts” basis up to $8.0 million of shares of our common stock, $0.0001 par value per share (“Common Stock” or
“common stock”), and Series A common stock purchase warrants (“Series A Common Warrants”) and Series B common
stock purchase warrants (“Series B Common Warrants” and together with the Series A Common Stock Warrants, the “common
warrants”), at an assumed combined public offering price of $0.60 (equal to the last sale price of our Common Stock as reported
by The Nasdaq Capital Market on December 1, 2023). Each common warrant is exercisable for one share of Common Stock, is assumed to have
an exercise price of $0.60 per share (100% of the assumed public offering price per share and accompanying common warrants). The Series
A Common Warrants will be exercisable upon issuance and will expire 5 years from the date of issuance. The Series B Common Warrants will
be exercisable upon issuance and will expire in 2 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 to
those purchasers, if any, 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 opportunity to purchase pre-funded warrants in lieu of shares of our Common Stock that
would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of such purchaser, 9.99%)
of our outstanding Common Stock. The purchase price for each pre-funded warrant and common warrants will equal the combined public offering
price for the Common Stock and accompanying common warrants in this offering less the $0.001 per share exercise price of each such pre-funded
warrant. 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 each pre-funded warrant we sell, the number
of shares of Common Stock we are offering will be decreased on a one-for-one basis.
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 Series A Common
Warrant to purchase one share of Common Stock and one Series B 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 Series A Common Warrant and one Series B Common Warrant
is being offered on a best-efforts basis as described in this prospectus for a maximum aggregate offering amount of $8.0 million. 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.
The Nasdaq Listing Qualifications
staff is seeking delisting of our Common Stock, subject to an appeal hearing on February 1, 2024. Our shares of Common Stock are listed
on The Nasdaq Capital Market under the symbol “ALLR.” On December 1, 2023, the last reported sale price of our Common Stock
on The Nasdaq Capital Market was $0.60 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 actual 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, will be negotiated between us,
the placement agent and the investors in the offering based on a to be negotiated discount to the trading price of our Common Stock prior
to the offering.
As of December 1, 2023,
3i, LP, the sole holder of our Series A Preferred Stock and holder of a warrant to purchase 9,452,667 shares of Common Stock at $1.00
per share, subject to adjustment upon closing of this offering, may 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.
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 December 29, 2023, 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. Accordingly, neither we nor the placement agent have made any arrangements to place investor funds in an escrow account
or trust account since the placement agent will not receive investor funds in connection with the sale of the securities offered hereunder.
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 9.
| |
Per
Share
of Common Stock and Common Warrant | | |
Per
Pre-Funded Warrant
and Common Warrant | | |
Total
Offering | |
Public offering price | |
$ | | | |
$ | | | |
$ | | |
Placement Agent Fees(1) | |
$ | | | |
$ |
| | |
$ |
| |
Proceeds to us (before expenses)(2) | |
$ | | | |
$ |
| | |
$ |
| |
(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
, 2023, subject to customary closing conditions.
Sole Placement Agent
A.G.P.
The date of this prospectus is ,
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,” “Allarity,” “we,” “our”
and “us” refer to Allarity Therapeutics, Inc., a Delaware corporation.
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 estimates regarding expenses, capital requirements and need for additional financing. We have insufficient cash to continue our operations, and our continued operations are dependent on us raising capital and these conditions give rise to substantial doubt over our ability continue as a going concern; |
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the number of shares of Common
Stock that may be sold under this prospectus, other current prospectus relating to resale registration
statement filed with the SEC, and pursuant to Rule 144 of the Securities Act of 1933, as amended,
is significant in relation to the number of our outstanding shares of Common Stock. If such shares
of Common Stock are sold in the market all at once or at about the same time, it could depress the
market price of our Common Stock and would also affect our ability to raise equity capital; |
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our ability to meet the Nasdaq
Capital Market (“Nasdaq”) continued listing standards. The listing of our Common Stock
on Nasdaq is contingent on our compliance with Nasdaq’s conditions for continued listing. We
have a history of non-compliance and currently are not in compliance with the continued listing requirements.
Pursuant to a Nasdaq letter dated July 14, 2023, the Company is subject to a panel monitor for a
period of one year, which includes continued compliance with the stockholders’ equity requirement
and other continued listing requirements. Failure to meet the stockholders’ equity requirement
of $2,500,000 will result in immediate delisting, subject to the Company’s right to appeal.
On October 27, 2023, we received notification from the Nasdaq Listing Qualifications staff that it
intends to delist our Common Stock because the bid price of our Common Stock has closed at less than
$1 per share over the previous 30 consecutive business days. The Company filed a notice to appeal
this determination and received a hearing date of February 1, 2024 (the “Panel Hearing”).
On November 16, 2023, we received an additional notification indicating that the Company’s
stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the period ended
September 30, 2023, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5810(c)(3)
which serves as an additional basis for delisting. The Company intends to present its views with
respect to this additional deficiency at the Panel Hearing. In the event our Common Stock is no longer
listed for trading on Nasdaq, 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 would 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; |
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our ability to maintain effective internal control over financial reporting, disclosures and procedures.
If we do not maintain effective internal controls, our ability to record, process and report financial information timely and accurately
could be adversely affected and could result in a material misstatement in our financial statements, which could subject us to litigation
or investigations, require management resources, increase our expenses, negatively affect investor confidence in our financial statements
and adversely impact the trading price of our Common Stock; |
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the impact of adjustments to
our outstanding warrants because of future dilutive financings resulting in the decrease of exercise
price and increase the number of shares of Common Stock issuable under outstanding warrants, adjustment
and exercise of such warrants would result in the material dilution of the percentage ownership of
our stockholders and increase the number of shares of Common Stock in the public markets. The perception
that such sales could occur could cause our stock price to fall;
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our ability to cure the default under our license agreement with Novartis. We failed to make a
milestone payment, and on April 4, 2023, we received notice from Novartis stating that Allarity Therapeutics Europe ApS was in breach
of the license agreement and has 30 days from April 4, 2023, to cure. As a result of ongoing negotiations with Novartis to address
our non-payment, we made payments of $100,000 and $300,000 to Novartis in April and August 2023, respectively. We intend to cure
this breach upon and subject to availability of funds and/or continue 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; |
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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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our plans to develop and commercialize our drug candidates; |
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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 our 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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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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our ability to secure sufficient funding and alternative sources 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, or 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 work associated with our drug discovery and preclinical activities and to
conduct our preclinical studies and clinical trials in a satisfactory manner; |
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our ability to secure reliable 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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our ability to maintain our licensed
intellectual property rights to develop, use and market our therapeutic candidates. |
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.
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, our Quarterly Reports on Form 10-Qs for the three, six and nine months ended March 31, 2023, June 30, 2023,
and September 30, 2023, respectively, and any subsequent Current Reports on Form 8-K, and any other reports that we file after the date
of this prospectus.
Overview
We are a clinical-stage, precision
medicine pharmaceutical 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, with stenoparib (a poly-ADP-ribose polymerase (“PARP”) inhibitor)
as our lead program: dovitinib in combination with stenoparib for the treatment of a number of solid tumors (including ovarian cancer),
stenoparib as a monotherapy for the second-line or later treatment of metastatic ovarian cancer, and IXEMPRA® as a monotherapy
for the second-line or later treatment of 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, stenoparib,
dovitinib, and IXEMPRA® (ixabepilone) are all former drug candidates of large pharmaceutical companies. We recently announced
that PARP inhibitor, stenoparib, is now our lead clinical asset, and is currently being advanced in two out of three of our ongoing clinical
trials. We will continue to focus our energies, efforts, and resources on advancing clinical development of stenoparib, supported by
continuing clinical development of our IXEMPRA® and dovitinib assets, both of which we continue to believe have substantial
clinical and commercial potential.
Our lead therapeutic candidate
is stenoparib (formerly E7449), a novel inhibitor of the key DNA damage repair enzyme PARP, which also has an observed inhibitory action
against Tankyrases, another important group of enzymes involved in cancer cell division and maintenance. 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, as a result of our July Offering (as defined below), we are continuing a stenoparib in combination with dovitinib
Phase 1b/2 clinical trial for a number of solid tumors.
Our second priority 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 dovitinib for the treatment of advanced solid tumors, including
ovarian cancer. The completion of the July Offering (as defined below) provided us with some 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 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® 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 with
the European Medicine Agency 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 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:
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.
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 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.
Recent Events
Subsequent to our quarterly period ended September 30, 2023, we
received the notifications discussed below. The transactions or events or notifications discussed below are discussed in more detail
in Current Report on Form 8-K filed by us with the SEC and incorporated by reference. See section titled “Incorporation of Certain
Information By Reference.”
NASDAQ Delisting Notifications
On October 27, 2023, we
received notification from Nasdaq Listing Qualifications staff that it has determined that the bid price of our Common Stock has closed
at less than $1 per share over the previous 30 consecutive business days, and, as a result, does not comply with Listing Rule 5550(a)(2).
Further, Nasdaq also noted that we effected a 1:35 reverse stock split on March 24, 2023, and a 1:40 reverse stock split on June 28,
2023. Because we effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more
to one, we will not be afforded a 180-calendar day period to demonstrate compliance with Listing Rule 5550(a)(2) pursuant to Listing
Rule 5810(c)(3)(A)(iv).In that regard, unless the Company requested an appeal from such determination, trading of the Company’s
Common Stock would have been suspended at the opening of business on November 7, 2023, and a Form 25-NSE would have been filed with the
Securities and Exchange Commission which would have removed the Company’s Common Stock from listing and registration on The Nasdaq
Stock Market.
The Company requested
an appeal for such determination and was given a hearing date of February 1, 2024 (the “Panel Hearing”). During the appeal
period, the Company’s Common Stock will continue to be listed on The Nasdaq Stock Market.
On November 16, 2023,
we received an additional notification indicating that the Company’s stockholders’ equity as reported in its Quarterly Report
on Form 10-Q for the period ended September 30, 2023, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5810(c)(3)
which serves as an additional basis for delisting. The Company intends to present its views with respect to this additional deficiency
at the Panel Hearing.
See “RISK FACTORS -Risks
Related to Our Business -Our License Agreement with Eisai is Subject to Risk.”
THE OFFERING
Common Stock offered by us
|
|
Up to 13,333,333
shares based on an assumed combined public offering price of $0.60, which is equal to the
last sale price of our Common Stock as reported by The Nasdaq Capital Market on December
1, 2023. |
|
|
|
Common Warrants offered by us |
|
Up to 13,333,333 Series A Common
Warrants to purchase up to 13,333,333 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 $0.60 per share of Common Stock. Up to 13,333,333 Series B Common Warrants to purchase up
to 13,333,333 shares of our Common Stock which will be exercisable during the period commencing on
the date of their issuance and ending two years from such date at an exercise price of $0.60 per
share of Common Stock. The Series A Common Warrants and Series B Common Warrants (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, the opportunity to purchase 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
warrants will equal the price at which the Common Stock and the accompanying common warrants are being sold to the public in this
offering, minus $0.001, and the exercise price of each pre-funded warrant will be $0.001 per share. The pre-funded warrants will
be exercisable immediately and may be exercised at any time until exercised in full. For each pre-funded warrant we sell, the number
of shares of Common Stock we are offering will be decreased on a one-for-one basis. Because we will issue one Series A Common Warrant
and one Series B 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 |
|
$0.60 per share of Common Stock
and accompanying common warrants or $0.599 per pre-funded warrant and accompanying common warrants,
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
43 of this prospectus. |
|
|
|
Shares of Common Stock to be
Outstanding Immediately After
this Offering (1) |
|
Up to 18,157,956 shares of
Common Stock (assuming the sale of the maximum number of shares of Common Stock in this offering,
at the assumed combined public offering price of $0.60, the closing sale price of our Common Stock
on the Nasdaq Capital Market on December 1, 2023, and no sale of any pre-funded warrants but excluding
the number of shares of Common Stock issuable upon exercise of common warrants sold in this offering). |
Use of Proceeds |
|
We estimate that
the net proceeds from this offering will be approximately $7.105 million (assuming
the sale of all securities offered hereby at the combined public offering price of $0.60,
based on the closing sale price of our Common Stock on the Nasdaq Capital Market on December
1, 2023, and assuming no sale of any pre-funded warrants and no exercise of the 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 the Novartis license agreement, to continue our clinical trials, to pay account payables
and accrued liabilities outstanding, and for working capital and general corporate purposes.
The amount of net proceeds and payments therefrom will depend on the actual amount of the proceeds
we will receive from the offering and 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 9,452,667 shares of Common Stock as of December 1,
2023, 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 22 of this prospectus. |
|
|
|
Risk Factors |
|
You should read the “Risk Factors” section beginning on page 9 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, six-month period ended June 30, 2023, and nine-month period ended September
30, 2023, which are 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 4,824,623 shares of Common Stock outstanding
as of December 1, 2023, and excludes the following: |
|
|
|
● |
396
shares Common Stock issuable pursuant to options outstanding as of December 1, 2023, with a weighted-average exercise price of $7,876.22; |
|
|
|
|
● |
1,417
shares of Common Stock available under our 2021 Equity Incentive Plan (“2021 Plan”)
as of December 1, 2023; |
|
|
|
|
● |
817,867
shares of Common Stock upon exercise of warrants to purchase shares of Common Stock at an
exercise price of $1.00 per share, issued by us in a public offering that closed on April
21, 2023 (“April Offering”) and July 10, 2023 (“July Offering”) as
of December 1, 2023; |
|
|
|
|
● |
up
to 4,877,778 shares of Common Stock issuable upon exercise of warrants to purchase shares
of Common Stock at an exercise price of $1.00 per share (the “Inducement Warrants”)
issued by us to certain investors (“September Investors”) in a private placement
of the Inducement Warrants which closed in September 2023 pursuant to Warrant Exercise Inducement
Letters dated September 14, 2023 (“Inducement Letter”) as of December 1, 2023; |
|
|
|
|
● |
up
to 1,530,360 shares of Common Stock issuable to 3i, LP upon conversion of 1,417 shares of
our Series A Convertible Preferred Stock (“Series A Preferred Stock”) based upon
a conversion price of $1.00 and stated value of $1,080, subject to adjustment as of December
1, 2023; |
|
|
|
|
● |
Up
to 9,452,667 shares of Common Stock issuable upon exercise of a warrant to purchase Common
Stock at an exercise price of $1.00 per share, subject to adjustment (“Exchange Warrant”),
issued to 3i, LP pursuant to a Modification and Exchange Agreement dated April 20, 2023,
as amended (the “Exchange Agreement”) as of December 1, 2023; and |
|
|
|
|
● |
up
to 13,333,333 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 September 30, 2022 and 2023, and summary consolidated statements
of operations and comprehensive loss data for the nine months ended September 30, 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 give effect to the Share Consolidations.
In thousands, except share data |
|
As of December 31, |
|
|
As of September
30, |
|
|
|
2021 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
49,633 |
|
|
$ |
14,544 |
|
|
$ |
18,134 |
|
|
$ |
13,875 |
|
Total liabilities |
|
|
30,849 |
|
|
|
12,654 |
|
|
|
14,631 |
|
|
|
17,254 |
|
Total mezzanine equity |
|
|
632 |
|
|
|
2,003 |
|
|
|
2,056 |
|
|
|
— |
|
Total stockholders’ equity (deficit) |
|
$ |
18,152 |
|
|
$ |
(113 |
) |
|
$ |
1,447 |
|
|
$ |
(3,379 |
) |
|
|
Year Ended
December 31, |
|
|
Nine Months
Ended
September 30, |
|
|
|
2021 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
Consolidated Statements of Operations and Comprehensive Loss Data |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
14,196 |
|
|
|
6,930 |
|
|
|
5,989 |
|
|
|
4,480 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
17,571 |
|
|
|
14,007 |
|
|
|
— |
|
General and administrative |
|
|
12,360 |
|
|
|
9,962 |
|
|
|
7,717 |
|
|
|
7,770 |
|
Total operating expenses |
|
|
26,556 |
|
|
|
34,463 |
|
|
|
27,713 |
|
|
|
12,250 |
|
Loss from operations |
|
|
(26,556 |
) |
|
|
(34,463 |
) |
|
|
(27,713 |
) |
|
|
(12,250 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from sale of IP |
|
|
1,005 |
|
|
|
1,780 |
|
|
|
1,780 |
|
|
|
— |
|
Interest income |
|
|
— |
|
|
|
30 |
|
|
|
19 |
|
|
|
19 |
|
Interest expense |
|
|
(499 |
) |
|
|
(223 |
) |
|
|
(107 |
) |
|
|
(268 |
) |
Finance expenses |
|
|
(1,347 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss on investment |
|
|
(495 |
) |
|
|
(115 |
) |
|
|
(115 |
) |
|
|
— |
|
Foreign exchange losses |
|
|
(95 |
) |
|
|
(913 |
) |
|
|
(944 |
) |
|
|
(87 |
) |
Fair value of New September Warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,189 |
) |
Fair value of modification to April & July 2023 Warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(591 |
) |
Change in fair value adjustment of derivative
and warrant liabilities |
|
|
2,087 |
|
|
|
17,579 |
|
|
|
13,442 |
|
|
|
7,187 |
|
Penalty on Series A Preferred stock liability |
|
|
— |
|
|
|
(800 |
) |
|
|
(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 |
|
|
|
13,275 |
|
|
|
2,071 |
|
Net loss for the period before tax expense |
|
|
(26,515 |
) |
|
|
(17,579 |
) |
|
|
(14,438 |
) |
|
|
(10,179 |
) |
Income tax benefit (expense) |
|
|
(133 |
) |
|
|
1,521 |
|
|
|
1,218 |
|
|
|
— |
|
Net loss |
|
|
(26,648 |
) |
|
|
(16,058 |
) |
|
|
(13,220 |
) |
|
|
(10,179 |
) |
Deemed dividend on Series C Convertible Preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(123 |
) |
Deemed dividend on Series A Convertible Preferred stock |
|
|
— |
|
|
|
(1,572 |
) |
|
|
(1,572 |
) |
|
|
(8,392 |
) |
Cash paid on converted Series
A Convertible Preferred stock |
|
|
— |
|
|
|
(3,421 |
) |
|
|
(3,157 |
) |
|
|
— |
|
Net loss attributable to common stockholders |
|
$ |
(26,648 |
) |
|
$ |
(21,051 |
) |
|
|
(7,949 |
) |
|
|
(18,694 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis and diluted net loss
per share applicable to common stockholders |
|
$ |
(146.67 |
) |
|
$ |
(77.36 |
) |
|
$ |
(2,733.21 |
) |
|
$ |
(19.38 |
) |
Basic and diluted weighted average common shares outstanding |
|
|
181,686 |
|
|
|
272,204 |
|
|
|
6,567 |
|
|
|
964,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(26,648 |
) |
|
$ |
(16,058 |
) |
|
$ |
(13,220 |
) |
|
$ |
(10,179 |
) |
Change in cumulative translation adjustment |
|
|
(1,966 |
) |
|
|
(121 |
) |
|
|
(1,271 |
) |
|
|
(37 |
) |
Change in fair value
attributable to instrument specific credit risk |
|
|
(9 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total comprehensive loss attributable to common stockholders |
|
$ |
(28,623 |
) |
|
$ |
(16,179 |
) |
|
$ |
(14,491 |
) |
|
$ |
(10,216 |
) |
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” and 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 periods ended March 31, 2023, June 30, 2023, and September 30, 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 past December 2023, our continued operations are dependent on us raising capital and these conditions give rise to substantial
doubt over the Company’s ability to continue as a going concern
The Company has incurred
significant losses and has an accumulated deficit of $92.7 million as of September 30, 2023. As of September 30, 2023, our cash of $1,399,000
is insufficient to fund our current operating plan and planned capital expenditures past December 2023. Further, we believe that our
existing cash and cash equivalents as of December 4, 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 this offering 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 and in August 2023, we paid Novartis $300,000. We intend to cure
this breach by making the milestone payments from proceeds of the July 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) $100,000; (ii) $50,000 within 10 days of execution
of the fourth amendment; (iii) $100,000 upon completion of a capital raise (of which items (i) and (iii) have been paid): and (iv) $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.
Risks
Related to Owning our Securities and this Offering
If
we fail to satisfy The Nasdaq Capital Market continued listing requirements and do not 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 would 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 would be suspended at the opening of business
on April 20, 2023, and a Form 25-NSE would be filed with the SEC which would 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 were 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 would 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 were not in compliance with the minimum MVPHS of $5,000,000
requirement under the Nasdaq Listing Rules. Based on our MVPHS for the 31 consecutive business days from November 4, 2022, to December
19, 2022, we no longer met the minimum MVPHS requirement set forth in Listing Rule 5450(b)(1)(C). Under Nasdaq Listing Rules, we were
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 had to close at $5,000,000 for a minimum of 10 consecutive business days. 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 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 demonstrates 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 demonstrates compliance with Nasdaq Listing Rule 5450(a)(1) dealing with
a minimum bid of $1.00 per share. 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 demonstrates compliance with Listing Rule 5550(a)(2); and (2) on or before July 14, 2023, the Company demonstrates
compliance with Listing Rule 5550(b).
On July 14, 2023, the
Company received a letter from Nasdaq confirming that the Company has regained compliance with the bid price and equity concerns, as
required by the Nasdaq hearings panel decision dated June 6, 2023, as amended. The Company is subject to a panel monitor for a period
of one year from the July 14, 2023, letter pursuant to Nasdaq Listing Rule 5815(d)(4)(B), which includes continued compliance with the
stockholders’ equity requirement and other continued listing requirements. Failure to meet the stockholders’ equity requirement
of $2,500,000 would result in immediate delisting, subject to the Company’s right to appeal. As of June 30, 2023, the Company had
a stockholders’ deficit of $723,000. Subsequent to June 30, 2023, on July 10, 2023, the Company completed a public offering of
common stock or pre-funded warrants and warrants to purchase common stock raising gross proceeds of approximately $11 million. After
giving effect to the July 10, 2023, public offering, the Company’s stockholders’ equity as of June 30, 2023, on a pro forma
basis, was $4.355 million. As of September 30, 2023, the Company had a stockholders’ deficit and will need to raise capital in
order to meet Nasdaq’s stockholders’ equity requirement.
On October 27, 2023, we
received notification from Nasdaq that it has determined that the bid price of our Common Stock had closed at less than $1 per share
over the previous 30 consecutive business days, and, as a result, did not comply with Listing Rule 5550(a)(2). Further, Nasdaq also noted
that we effected a 1:35 reverse stock split on March 24, 2023, and a 1:40 reverse stock split on June 28, 2023. Because we effected one
or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, we will not be afforded
a 180-calendar day period to demonstrate compliance with the Listing Rule 5550(a)(2) pursuant to Listing Rule 5810(c)(3)(A)(iv).
In that regard, unless
we requested an appeal from such determination, trading of our Common Stock would have been suspended at the opening of business on November
7, 2023, and a Form 25-NSE would have been filed with the SEC which would have removed our Common Stock from listing and registration
on The Nasdaq Stock Market. We filed a notice of appeal and received a hearing date of February 1, 2024. During such appeal, our Common
Stock will continue to be listed on The Nasdaq Capital Market. On November 16, 2023, we received an additional notification indicating
that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the period ended September 30,
2023, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5810(c)(3) which serves as an additional basis for delisting.
The Company intends to present its views with respect to this additional deficiency at the Panel Hearing on February 1, 2024.
In addition, if we
fail to meet any other Nasdaq listing requirements and do not regain compliance, we may be subject to delisting by Nasdaq. In the event
our Common Stock is no longer listed for trading on Nasdaq, 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.
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 warrants 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
warrants. Upon exercise of the pre-funded warrant or common warrants, 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
assumed 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. Therefore, assuming the sale of all shares of Common Stock offered hereby and no sale of any pre-funded warrants
in this offering, you will suffer immediate and substantial dilution of $0.93 in the pro forma as adjusted net tangible book value per
share of Common Stock as of September 30, 2023, based on the assumed combined public offering price of $0.60, which is the last reported
sale price of our Common Stock on The Nasdaq Capital Market on December 1, 2023. Therefore, if you purchase 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.
We
have granted certain rights to certain holders of our securities which limits our ability to raise funds from the sale of our securities.
Upon the closing of this offering, the exercise price of the Exchange Warrant will be subject to adjustment based on the public price
of this offering.
Holders of our shares
of Series A Preferred Stock, Existing Warrants, Inducement Warrants and Exchange Warrant have certain rights that limit our ability to
raise funds from the sale of our securities. Under the Exchange Agreement, subject to certain exceptions, we agreed that so long as any
holder of Series A Preferred Stock beneficially owns any shares of Series A Preferred Stock, the Company will not, without the prior
written consent of certain holders of Series A Preferred Stock, issue any Series A Preferred Stock. The Company also agreed that neither
the Company nor any of its subsidiaries would issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or
announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked
or related security (including, without limitation, any “equity security” except for the April Offering (any such issuance,
offer, sale, grant, disposition or announcement (whether occurring during certain restricted period or at any time thereafter). Therefore,
so long as there are any shares of Series A Preferred Stock outstanding, we must receive the consent of the required holder of the Series
A Preferred Stock prior to undertaking any offering. In addition, in connection with the Inducement Warrants and the July Offering, we
are prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of shares
of Common Stock or Common Stock equivalents (or a combination of units thereof) involving a Variable Rate Transaction until January 10,
2024. On October 13, 2023, 3i, LP granted a waiver to permit this Offering.
Furthermore, under the
terms of the Exchange Warrant, if we sell securities below the exercise price of the respective warrant, then the exercise price of the
Exchange Warrant is subject to an adjustment based on the purchase price of the securities. 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 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 our 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 relate 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 submissions
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, sales by holders of Inducement Warrants and Existing Warrants which have been registered
for resale on registration statements filed with the SEC; |
|
● |
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 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,
recommendations and changes in recommendations, price targets, and withdrawals of coverage; |
|
● |
departures and additions
of key personnel; |
|
● |
disputes and litigation
related to intellectual properties, proprietary rights, and contractual obligations; |
|
● |
changes in applicable laws,
rules, regulations, or accounting practices and other dynamics; and |
|
● |
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 December 1,
2023, there are 1,417 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 to execute 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.
As of December 1, 2023,
we had (i) 1,417 shares of Series A Preferred Stock outstanding that could be converted into 1,530,360 shares of Common Stock based upon
a conversion price of $1.00 and stated value of $1,080, subject to adjustment, (ii) 817,867 shares of Common Stock issuable upon exercise
of warrants to purchase shares of Common Stock at an exercise price of $1.00 per share which were issued in a public offering that closed
in April 2023 and July 2023; (iii) 9,452,667 shares of Common Stock issuable upon exercise of a warrant to purchase Common Stock at an
exercise price of $1.00 per share issued pursuant to a Modification and Exchange Agreement dated April 20, 2023, as amended, and (iv)
4,877,778 shares of Common Stock issuable upon exercise of warrants to purchase shares of Common Stock at an exercise price of $1.00
per share issued to the September Investors. The holder of the Series A Preferred Stock and holders of our warrants 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, and dilute stockholders ownership 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, and the Common Stock issuable upon the exercise of the Inducement
Warrants by the September Investors.
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.
In connection with the
Inducement Warrants, we agreed to file a Resale Registration Statement on or before October 15, 2023, and to use commercially reasonable
efforts to have such Resale Registration Statement declared effective by the SEC within 90 days following the date of the issuance of
the Inducement Warrants and to keep the Resale Registration Statements effective at all times until no holder of the Inducement Warrants
owns any Inducement Warrants or Inducement Warrant Shares. We also granted liquidated damages to the September Investors in the event
of (i) a Public Information Failure or (ii) a Stockholder Approval Failure, and the September Investors are unable to sell their Inducement
Warrant Shares. In either event, or both events, we will be required to pay the September Investors an amount in cash equal to 1.5% of
the aggregate exercise price of the Inducement Warrants held by the Holder on the day of a Public Information Failure and/or Stockholder
Approval Failure and on every 30th day (pro rated for periods totaling less than 30 days) thereafter until the Public Information Failure
and Stockholder Approval Failure are 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 that 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 bylaws, 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 bylaws 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 1,417 are outstanding as of December 1, 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, and 50,000 shares
have been designated as Series C Preferred Stock, none of which are 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, bylaws 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 bylaws without stockholder approval; |
|
● |
establish 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 bylaws; 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 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. Although we believe we have remediated
the material weaknesses previously identified in our internal control over financial reporting, 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.
USE
OF PROCEEDS
We estimate that the net
proceeds from this offering will be approximately $7.105 million after deducting the placement agent fees and estimated offering expenses
payable by us, assuming the sale of all securities offered hereby at the assumed combined public offering price of $0.60 per Common Stock
and accompanying common warrants based on the closing sale price of our Common Stock on the Nasdaq Capital Market on December 1, 2023,
and assuming no sale of any pre-funded warrants and no exercise of the common warrants issued in connection with this offering.
A $0.10 increase (decrease)
in the assumed combined public offering price per share would increase (decrease) the net proceeds to us from this offering by approximately
$1.2 million ($1.2 million) assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the
same, after deducting the placement agent fee and estimated offering expenses payable by us and assuming no exercise of common warrants
or sale of pre-funded warrants.
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 continue our clinical trials, to pay account payables and accrued liabilities outstanding, and for working capital and general corporate
purposes. The use of proceeds and payments therefrom will depend on the actual amount of the net proceeds we will receive from the offering
and will be subject to the discretion of and timing by the Board of Directors.
In
addition, 3i, LP 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 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 December
1, 2023, there was 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. In the nine months ended September 30, 2023, the Company recorded a deemed dividend of $123,000 on the Series C Preferred Stock
and a deemed dividend of $8,392,000 on the Series A Preferred Stock.
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 September 30, 2023:
|
● |
on an actual basis reflecting
the Share Consolidations and prepayment of $639,000 for the exercise of 639,000 common stock purchase
warrants at an exercise price of $1.00; |
|
● |
on a pro forma basis giving
effect to the following: issuance of 639,000 shares of Common Stock pursuant to exercise of common
stock purchase warrants at $1.00 per share of which $639,000 was previously pre-paid as recorded
in the quarter ended September 30, 2023; and |
|
● |
on a pro forma as adjusted
basis to give effect to the issuance and sale of shares of our Common Stock and pre-funded warrants
to purchase up to 13,333,333 shares of our Common Stock in this offering at an assumed combined
public offering price of $0.60 per share of Common Stock and common warrant (the last reported
sale price of our Common Stock on The Nasdaq Capital Market on December 1 2023), less placement agent
fees and estimated offering expenses payable by us, for total net proceeds of approximately $7.105
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 September 30, 2023, incorporated by reference to this prospectus.
| |
As of September 30, 2023 | |
(In thousands, except share data) | |
Actual (unaudited) | | |
Pro Forma | | |
Pro Forma As Adjusted | |
Cash | |
$ | 1,399 | | |
$ | 1,399 | | |
$ | 8,504 | |
Total long-term liabilities | |
| 1,510 | | |
| 1,510 | | |
| 1,510 | |
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: 1,417, 1,417 and 1,417 | |
| 1,742 | | |
| 1,742 | | |
| 1,742 | |
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; 4,185,623, 4,824,623 and 18,157,956 | |
| — | | |
| — | | |
| 1 | |
Additional paid-in capital | |
| 88,366 | | |
| 88,366 | | |
| 95,470 | |
Accumulated other comprehensive loss | |
| (759 | ) | |
| (758 | ) | |
| (758 | ) |
Accumulated Deficit | |
| (92,729 | ) | |
| (92,729 | ) | |
| (92,729 | ) |
Total Stockholders’ (deficit)
equity | |
| (3,379 | ) | |
| (3,379 | ) | |
| 3,726 | |
Total Capitalization | |
$ | (1,869 | ) | |
$ | (1,869 | ) | |
$ | 5,236 | |
A $0.10 increase (decrease)
in the assumed combined public offering price per share of Common Stock and common warrants of $0.60, which was the last reported sale
price of our Common Stock on the Nasdaq Capital Market on December 1, 2023, would increase (decrease) each of cash, Common Stock and
additional paid-in capital, total stockholders’ equity and total capitalization on a pro forma as adjusted basis by approximately
$1.2 million ($1.2 million), assuming that the number of shares of Common Stock offered by us, as set forth on the cover page of this
prospectus, remains the same and after deducting the placement agent fee and estimated offering expenses payable by us and assuming no
exercise of common warrants or sale of pre-funded warrants.
The table and discussion
above is based on 4,185,623 shares of Common Stock outstanding as of September 30, 2023, and excludes the following:
|
● |
401 shares of Common Stock issuable pursuant to options
outstanding as of September 30, 2023, with a weighted-average exercise price $7,712; |
|
● |
1,401 shares of Common Stock available under our 2021 Plan as of
September 30, 2023; |
|
● |
9,452,667 shares of Common
Stock issuable upon exercise of the Exchange Warrant at an exercise price of $1.00 per share, subject
to adjustment issued to 3i, LP, subject to adjustment based on the public offering price in this
offering as of September 30, 2023; |
|
● |
1,456,867
shares of Common Stock issuable upon the exercise of warrants to purchase shares of Common
Stock at an exercise price of $1.00 per share, issued by us in the April Offering (“April
2023 Common Stock Warrants”) and warrants to purchase shares of Common Stock at an
exercise price of $1.00 per share issued by us in the July Offering (the “July 2023
Common Stock Warrants”) as of September 30, 2023; |
|
● |
up to 4,877,778 shares of Common
Stock issuable upon exercise of the Inducement Warrants at an exercise price of $1.00 per share,
issued by us to the September Investors in a private placement of the Inducement Warrants, which
closed on September 15, 2023, pursuant to the Inducement Letter as of September 30, 2023; |
|
● |
up to 1,530,360 shares of Common
Stock issuable to 3i, LP upon conversion of 1,417 share of our Series A Preferred Stock based upon
a conversion price of $1.00 and stated value of $1,080, subject to adjustment as of September 30,
2023; and |
|
● |
up
to 13,333,333 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 September 30, 2023, was ($3,093,000), or ($3.13) 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 4,185,623 shares of our Common Stock outstanding
as of September 30, 2023. After giving effect to the issuance of 639,000 shares of Common Stock issued in connection with the exercise
of common stock purchase warrants at an exercise price of $1.00, of which the purchase price was pre-paid and recorded in the quarter
ended September 30, 2023; our pro forma net tangible book value would have been ($13,093,000), or ($2.71) per share of our Common Stock.
After giving effect to
the sale of Common Stock and common warrants in this offering at an assumed combined public offering price of $0.60, the closing sale
price per share of our Common Stock on December 1, 2023, and $0.599 per pre-funded warrant and accompanying common warrants (which equals
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 September 30, 2023 would have been approximately ($5,988,000), or ($0.33) per share. This represents an immediate increase in pro
forma net tangible book value of $2.38 per share to existing stockholders and an immediate dilution of $0.93 per share to new investors.
The following table illustrates this per share dilution:
Assumed public offering price per share | |
| | | $ |
0.60 |
|
Historical negative net tangible book value per share as of September 30, 2023 | |
$ | (2.71 | ) |
|
|
|
Pro forma negative net tangible book value per share as of September 30, 2023 | |
$ | 0.33 | |
|
|
|
Increase (decrease) in the net tangible book value per share attributable to this offering | |
$ | 2.38 | |
|
|
|
Pro forma as adjusted net tangible book value per share after this offering | |
| | | $ |
(0.33) |
|
Dilution per share to new investors participating in this offering | |
| | | $ |
0.93 |
|
A $0.10 increase (decrease)
in the assumed combined public offering price of a share of Common Stock and the accompanying common warrants, assuming that the number
of shares of Common Stock offered by us, as set forth on the cover page of this prospectus, remains the same, assuming no exercise of
any common warrants, and after deducting the estimated placement agent fees and expenses, would increase or decrease our pro forma as
adjusted net tangible book value to approximately ($4.75) million or ($0.29) per share and ($7.23) million or ($0.35) per share, respectively,
representing an immediate dilution of approximately $0.99 and $0.85 per share to new investors purchasing shares of our Common Stock
in this offering.
The table and discussion
above are based on 4,185,623 shares of Common Stock outstanding as of September 30, 2023, and exclude the following:
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401 shares of Common Stock issuable pursuant to options
outstanding as of September 30, 2023, with a weighted-average exercise price $7,712; |
|
● |
1,401 shares of Common Stock available under our 2021 Plan as of
September 30, 2023; |
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● |
9,452,667 shares of Common
Stock issuable upon exercise of the Exchange Warrant at an exercise price of $1.00 per share, subject
to adjustment issued to 3i, LP, subject to adjustment based on the public offering price in this
offering as of September 30, 2023; |
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● |
1,456,867 shares of Common
Stock issuable upon the exercise of common stock warrants issued in the April Offering and July Offering
at an exercise price of $1.00 per share as of September 30, 2023; |
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Up to 4,877,778 shares of Common
Stock issuable upon exercise of the Inducement Warrants at an exercise price of $1.00 per share issued
by us to the September Investors in a private placement of the Inducement Warrants, which closed
on September 15, 2023, pursuant to the Inducement Letter as of September 30, 2023; |
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up to 1,530,360 shares of Common
Stock issuable to 3i, LP upon conversion of 1,417 share of our Series A Preferred Stock based upon
a conversion price of $1.00 and stated value of $1,080, subject to adjustment as of September 30,
2023; and |
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up to 13,333,333 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 a 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 December 1, 2023,
we had:
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4,824,623 shares of Common Stock issued and outstanding; |
|
|
|
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9,452,667 shares of Common Stock issuable upon exercise of the Exchange
Warrant at an exercise price of $1.00 per share, subject to adjustment issued to 3i, LP, subject to adjustment based on the public
offering price in this offering; |
|
|
|
|
● |
817,867 shares of Common Stock
upon exercise of warrants to purchase shares of Common Stock at an exercise price of $1.00 per share,
issued by us in the April Offering and July Offering; |
|
|
|
|
● |
396 shares of Common Stock issuable pursuant to outstanding options,
with a weighted-average exercise price of $7,876.22; |
|
|
|
|
● |
1,417 shares of Common Stock available under our 2021 Plan |
|
|
|
|
● |
up to 4,877,778 shares of Common Stock issuable upon exercise of
the Inducement Warrants at an exercise price of $1.00 per share, issued by us to the September Investors in a private placement of
the Inducement Warrants pursuant to the Inducement Letter; |
|
|
|
|
● |
up to 1,530,360 shares of Common Stock issuable to 3i, LP upon conversion
of 1,417 share of our Series A Preferred Stock based upon a conversion price of $1.00 and stated value of $1,080, subject to adjustment;
and |
|
|
|
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no shares of Series B Preferred Stock and no shares of Series C
Preferred Stock are 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 bylaws 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:
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the designation of the
series; |
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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); |
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whether dividends, if any,
will be cumulative or non-cumulative and the dividend rate of the series; |
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the dates at which dividends,
if any, will be payable; |
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the redemption rights and
price or prices, if any, for shares of the series; |
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the terms and amounts of
any sinking fund provided for the purchase or redemption of shares of the series; |
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the amounts payable on
shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs; |
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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; |
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restrictions on the issuance
of shares of the same series or of any other class or series; and |
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the voting rights, if any,
of the holders of the series. |
We
may 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 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 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 the Amended COD in the same manner and proportion as votes cast by the holders of Common Stock and Series A Preferred Stock,
voting as a 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 expired 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, 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 the Company entered into the 3i Waiver Agreement pursuant to which 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 the July Offering if the public offering price of the shares
of Common Stock in the July Offering is lower than the then-current conversion price of the Series A Preferred Stock; (ii) participating
in the July Offering, at its option, under the same terms and conditions as other investors, of which proceeds from 3i, LP’s participation
were agreed to 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 Warrants to the exercise price of the July 2023 Common Warrants ; and
(2) extending the termination date of the April 2023 Common Warrants to the date of termination of the common warrants offered in the
July 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 the 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.
Upon the consummation of the
July Offering, pursuant to the 3i Waiver Agreement, the conversion price of the Series A Preferred Stock was further reduced to $4.50.
On July 10, 2023, the Company filed the Third Amendment to effect the change to conversion price to $4.50.
Pursuant to the 3i Waiver
Agreement upon the consummation of the July Offering, the conversion price of the Series A Preferred Stock was reduced to $4.50. On July
10, 2023, the Company filed a Third Certificate of Amendment to Amended and Restated Certificate of Designations of Series A Convertible
Preferred Stock (“Third Amendment”) to effect the change to conversion price.
From the proceeds of the July
Offering, on July 10, 2023, the Company redeemed (i) 4,630 shares of Series A Preferred Stock held by 3i, LP, for $5,000,400 in cash,
and (ii) the 3i June Promissory Note for $350,886 in cash. Consequently, the 3i June Promissory Note was paid in full on July 10, 2023.
In connection with the
Inducement Letter and the transactions contemplated therein, the Company and 3i, LP entered into the Waiver pursuant to which 3i, LP
agreed to allow the filing of the Resale Registration Statement not otherwise permitted under certain agreements with 3i, LP. In consideration
of entering in the Waiver, the Company agreed to amend the “Conversion Price” of the Series A Convertible Preferred Stock
to equal $1.00 as soon as practicable. On September 22, 2023, the Company filed the Fourth Certificate of Amendment to Amended and Restated
Certificate of Designations of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware to reflect the
new conversion price of the Series A Preferred Stock of $1.00. In addition, as a result of the Inducement Warrants, pursuant to the terms
of the Exchange Warrant, in September 2023 the number of shares exercisable and the exercise price of the Exchange Warrant were adjusted
to 9,452,667 shares of Common Stock and $1.00 per share, respectively.
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 the reverse stock split, the Share Increase Proposal and the adjournment proposal as of immediately prior to the opening
of the polls at such meeting (the “Initial Redemption Time”) will be automatically 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 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 been
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 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 transactions pursuant to an April 20, 2023, Modification
and Exchange Agreement, as amended on May 26, 2023 (the “Exchange Agreement”), with 3i, LP, 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 of $27.00 per share, at a rate of 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 (as defined in the Series C Certificate of Designations) and the Reverse Stock Split
Proposal (as defined in the Series C Certificate of Designations) 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 $27.00 per share 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 of $27.00 per share (i) after the earlier of (1) the receipt
of Authorized Stockholder Approval (as defined in the Series C Certificate of Designations) 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 quarter ended March 31, 2023. In the nine months ended September 30, 2023, the Company recorded a deemed dividend
of $123,000 on the Series C Preferred Stock and a deemed dividend of $8,392,000 on the Series A Preferred Stock.
We have no current plans to
pay cash 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.
Warrants
There is no established public
trading market for the Exchange Warrant, pre-funded warrants and common warrants and we do not expect a market to develop. In addition,
we do not intend to apply to list our warrants on any national securities exchange or other trading market.
PIPE Warrant and Exchange Warrant
Concurrently with the
issuance of our Series A Preferred Stock, on December 20, 2021, we issued to 3i, LP a PIPE Warrant to purchase 1,443 shares of our Common
Stock at an exercise price of $13,868.40 per share. 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 the July Offering. Notwithstanding the foregoing changes, all other terms of the Exchange Warrant
are substantially the same as the terms of the PIPE Warrant. Under the Exchange Agreement, subject to certain exceptions we agreed that
so long as any holder of Series A Preferred Stock beneficially owns any shares of Series A Preferred Stock, the Company will not, without
the prior written consent of certain holders of Series A Preferred Stock, issue any Series A Preferred Stock. The Company agreed that
neither the Company nor any of its subsidiaries would issue, offer, sell, grant any option or right to purchase, or otherwise dispose
of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any
equity-linked or related security (including, without limitation, any “equity security” except for the April Offering (any
such issuance, offer, sale, grant, disposition or announcement (whether occurring during certain restricted period or at any time thereafter).
On October 13, 2023, 3i, LP granted a waiver to permit this Offering.
Upon the closing of the
July Offering, the number of shares exercisable under the Exchange Warrant and the exercise price was adjusted to 2,100,565 shares of
Common Stock and $4.50 per share, respectively. Subsequently on July 26, 2023, pursuant to Section 2(e) of the Exchange Warrant, due
to the event market price on the 16th day after the June Reverse Stock Split being less than the exercise price of the Exchange Warrant
then in effect, the number of shares exercisable under such Warrant and the exercise price was further adjusted to 3,134,693 shares and
$3.0155 per share, respectively. In addition, as a result of the Inducement Warrants, pursuant to the terms of the Exchange Warrant,
in September 2023, the number of shares exercisable and the exercise price of the Exchange Warrant were adjusted to 9,452,667 shares
of Common Stock and $1.00 per share, respectively.
The terms of the Exchange
Warrant are as follows:
|
● |
The Exchange Warrant has a term of three years
and expires on December 20, 2024; |
|
● |
The exercise of the Exchange Warrant is subject to a beneficial ownership limitation of 9.99%; |
|
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The exercise price and the number of shares issuable upon the exercise of the Exchange 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 Exchange 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 Exchange 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; |
|
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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 Exchange 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.
Common Warrants Issued in April Offering and
July Offering
July 2023 Common Warrants
In connection with the
July Offering, the Company issued the July 2023 Common Warrants. Subject to certain ownership limitations, the July 2023 Common Warrants
are exercisable immediately from the date of issuance. The July 2023 Common Warrants have an original exercise price of $4.50 per
share and expire on the 5 year anniversary of the date of issuance, July 10, 2023, unless otherwise agreed upon by us and holder of the
warrant. The exercise price of the July 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
July 2023 Common Warrants, each of the holders of the July 2023 Common Warrants will have the right to exercise its July 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 July 2023 Common Warrant. Additionally, in the event
of a fundamental transaction within the Company’s control, as described in the July 2023 Common Warrants, each holder of the July
2023 Common Warrants will have the right to require the Company to repurchase the unexercised portion of its July 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 July 2023 Common Warrants will have the right to require the Company or a successor
entity to redeem the unexercised portion of its July 2023 Common Warrant for the same consideration paid to the holders of the Company’s
Common Stock in the fundamental transaction at the unexercised July 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 (“April Investors”), we agreed that for a period
of 90 days from the close of the April Offering, 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 Warrants to the exercise price of the common warrant offered in
July Offering if the exercise price of the common warrant is lower than the then-current April 2023 Common Warrants exercise price; and
(ii) extending the termination date of the April 2023 Common Warrants to the date of termination of the common warrants offered in July
Offering. Concurrent with the close of the July Offering, the Company entered into an Amended and Restated Common Stock Purchase Warrant
to memorialize the repricing of exercise price of the April 2023 Common Warrants to $4.50 and the extension of the termination of the
April 2023 Common Warrants to July 10, 2028.
In connection with the Inducement
Warrants, the exercise price of the July 2023 Common Warrants was further adjusted to $1.00 per share.
April 2023 Common Warrants
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 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 “April Offering”. Such securities were sold pursuant to a securities purchase agreement with the purchaser signatory
thereto or pursuant to the prospectus which was part of an effective registration statement on Form S-1 filed with the SEC. The pre-funded
warrants and the common warrants were immediately separable and were issued separately in the April Offering. 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, 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. In addition, we agreed that for a period of 6 month anniversary of the closing date of
the April Offering, we would not effect or enter into an agreement to effect any issuance of shares of common stock or Common Stock Equivalents
(as defined in the securities purchase agreement) involving a Variable Rate Transaction (the “April Restrictive Provisions”).
“Variable Rate Transaction” means a transaction in which we (i) issue or sell any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive additional shares of common stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the common
stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence
of specified or contingent events directly or indirectly related to our business or the market for shares of Common Stock or (ii) enter
into, or effect a transaction under, any agreement, including, but not limited to, an equity line of credit or an “at-the-market
offering,” whereby we may issue securities at a future determined price regardless of whether shares pursuant to such agreement
have actually been issued and regardless of whether such agreement is subsequently canceled.
As of the date of this
prospectus, there are no pre-funded warrants outstanding from the April Offering. In connection with the April Offering, the Company
issued the April 2023 Common Warrants. Subject to certain ownership limitations, the April 2023 Common Warrants were exercisable immediately
from the date of issuance. The April 2023 Common Warrants had an exercise price of $34.00 per share and expire on the 5 year anniversary
of the date of issuance, April 21, 2023, unless otherwise agreed upon by us and the holder of the warrant. The exercise price of the
April 2023 Common Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications
of the Company’s Common Stock. In the event of a fundamental transaction, as described in the April 2023 Common Warrants, each
of the holders of the April 2023 Common Warrants will have the right to exercise its April 2023 Common Warrant and receive the same amount
and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction
if such holder had been, immediately prior to such fundamental transaction, the holder of shares of the Company’s Common Stock
issuable upon the exercise of its April 2023 Common Warrant. Additionally, in the event of a fundamental transaction within the Company’s
control, as described in the April 2023 Common Warrants, each holder of the April 2023 Common Warrants will have the right to require
the Company to repurchase the unexercised portion of its April 2023 Common Warrant at its fair value using a variant of the Black Scholes
option pricing formula. In the event of a fundamental transaction that is not within the Company’s control, each holder of the
April 2023 Common Warrants will have the right to require the Company or a successor entity to redeem the unexercised portion of its
April 2023 Common Warrant for the same consideration paid to the holders of the Company’s Common Stock in the fundamental transaction
at the unexercised April 2023 Common Warrant’s fair value using a variant of the Black Scholes option pricing formula.
Pursuant to a securities
purchase agreement entered into with certain investors in the April Offering, we agreed that for a period of 90 days from the close of
the April Offering, 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. In connection with the July Offering, the investors to the securities purchase agreement
in the April Offering 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 the July Offering if the exercise price of the common warrant is lower than the then-current April 2023 Common Warrant exercise
price; and (ii) the extension of the termination date of the April 2023 Common Warrant to the date of termination of the common warrants
offered in the July Offering. Concurrent with the close of the July Offering, the Company entered into an Amended and Restated Common
Stock Purchase Warrant to memorialize the repricing of exercise price of the April 2023 Common Warrant to $4.50 and the extension of
the termination of the April 2023 Common Warrant to July 10, 2028.
In connection with the Inducement
Warrants, the exercise price of the April 2023 Common Warrants was further adjusted to $1.00 per share.
General Terms of April 2023 Common Warrants,
July 2023 Common Warrants, and Inducement Warrants
The following summary
of certain terms and provisions of the April 2023 Common Warrants, July 2023 Warrants and Inducement Warrants (“Warrants”):
Exercisability.
The Warrants are 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
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 Warrants. No fractional shares of Common Stock will be issued
in connection with the exercise of a 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 Warrants, a registration statement registering the issuance of the shares of Common Stock underlying
the 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 Warrants.
Transferability.
Subject to applicable laws, Warrants in physical form may be transferred upon surrender of the Warrant together with the appropriate
instruments of transfer.
Exchange Listing.
There is no established public trading market for the Warrants, and we do not expect a market to develop. In addition, we do not intend
to list the Warrants on any securities exchange or nationally recognized trading system. Without an active trading market, the liquidity
of the Warrants will be limited.
Right as a Stockholder.
Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of shares of our Common Stock, the holders
of the Warrants do not have the rights or privileges of holders of our Common Stock, including any voting rights, until they exercise
their Warrants.
Fundamental Transaction.
In the event of a fundamental transaction, as described in the form of 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 Warrants
will be entitled to receive upon exercise of the Warrants the kind and amount of securities, cash or other property that the holders
would have received had they exercised the Warrants immediately prior to such fundamental transaction. Additionally, in the event of
a fundamental transaction within the Company’s control, as described in the respective Warrant, each holder of the Warrants will
have the right to require the Company to repurchase the unexercised portion of its 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 Warrants will have the right to require the Company or a successor entity to redeem the unexercised portion of its Warrant for
the same consideration paid to the holders of the Company’s Common Stock in the fundamental transaction at the unexercised Warrant’s
fair value using a variant of the Black Scholes option pricing formula.
Inducement Warrants
In September 2023, we
entered into the Inducement Letter dated September 14, 2023 with each of Armistice Capital Master Fund Ltd. and Sabby Volatility Warrant
Master Fund, Ltd., or the September Investors, who were the holders of Existing Warrants from the April Offering and the July Offering.
Pursuant to the Inducement Letter, the September Investors agreed to exercise for cash their respective Existing Warrants to purchase
an aggregate of up to 2,438,889 shares of the Company’s Common Stock, or the Existing Warrant Shares, at a reduced exercise price
of $1.00 per share, in consideration for the Company’s agreement to issue a new unregistered common stock purchase warrant to purchase
up to a number of shares of Common Stock equal to 200% of the number of Existing Warrant Shares issued, or the Inducement Warrants, pursuant
to each Existing Warrant exercise, or the Inducement Warrant Shares, exercisable for 5 years and 6 months from the issue date, at an
exercise price of $1.00, subject to adjustment. Upon execution of the Inducement Letter by each of the September Investors, the Company
issued the Inducement Warrants to the September Investors pursuant to a private placement. As of September 30, 2023, we have received
approximately $1.87 million, before deducting placement agent fees and offering expenses payable by the Company of approximately $156
thousand in exchange for the exercise of 1,237,578 Existing Warrant Shares; and we have recorded an obligation to issue 639,000 Existing
Warrant Shares.
We also agreed to file a registration
statement on Form S-3 (or other appropriate form if we are not then Form S-3 eligible) providing for the resale of the Inducement Warrant
Shares issuable upon the exercise of the Inducement Warrants, or the Resale Registration Statement, on or before October 15, 2023, and
to use commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC within 90 days following
the date of the issuance of the Inducement Warrants and to keep the Resale Registration Statement effective at all times until no holder
of the Inducement Warrants owns any Inducement Warrants or Inducement Warrant Shares. The Resale Registration Statement for the resale
of up to 4,877,778 shares of Common Stock was filed with the SEC on October 10, 2023 and declared effective on October 19, 2023.
We also granted liquidated
damages to the September Investors in the event that we fail to (i) provide current public information required under Rule 144(c), or
a Public Information Failure or (ii) obtain Stockholder Approval, if required, as defined in the letter agreement, or Stockholder Approval
Failure, and the September Investors are unable to sell their Inducement Warrant Shares. In either event, or both events, we will be
required to pay the September Investors an amount in cash equal to one and 1.5% of the aggregate exercise price of the Inducement Warrants
held by the Holder on the day of a Public Information Failure and/or Stockholder Approval Failure and on every 30th day (pro rated for
periods totaling less than 30 days) thereafter until the Public Information Failure and Stockholder Approval Failure are cured.
In addition, under the terms
of the Inducement Letter and the Securities Purchase Agreement relating to the July Offering, until January 10, 2024, the Company is prohibited
from effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of shares of Common Stock
or Common Stock equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or
exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to
being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for shares of Common Stock or (ii) enters into, or
effects a transaction under, any agreement, including, but not limited to, an equity line of credit or an “at-the-market offering”,
whereby the Company may issue securities at a future determined price regardless of whether shares pursuant to such agreement have actually
been issued and regardless of whether such agreement is subsequently canceled. Any Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
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 bylaws 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, bylaws 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 bylaws without stockholder approval; |
|
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establish 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. For each
pre-funded warrant we sell, the number of shares of Common Stock we are offering will be decrease on a one-for-one basis. Each share
of Common Stock and pre-funded warrant will be sold together with one Series A Common Warrant and one Series B Common Warrant. 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.
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 $ . The Series A Common Warrants
will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The Series B Common Warrants
will be immediately exercisable and will expire on the 2nd anniversary of the original issuance date. The exercise price and number of
shares of Common Stock issuable upon exercise are 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 to be entered into between A.G.P./Alliance Global Partners
(“A.G.P.”) and us, we will engage 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, will provide 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 Common Stock, Series A
Common Warrant and Series B Common Warrant | | |
Per Pre-Funded Warrant, Series
A Common Warrant and Series B Common Warrant | | |
Offering | |
Public offering price | |
$ | | | |
$ | | | |
$ | | |
Placement Agent Fees (7.0%) | |
$ | | | |
$ | | | |
$ | | |
Proceeds, before expenses, to us | |
$ | | | |
$ | | | |
$ | | |
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 $ , 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 the placement agent’s legal counsel, that we have agreed to pay at the closing of the offering, up to $ .
3i, LP Participation in this Offering
As of December 1, 2023,
3i, LP, the sole holder of our Series A Preferred Stock and holder of our warrants to purchase 9,452,667 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.). 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 22 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 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 actual 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, will be 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 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 underwriter, 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 will be 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) a lack of adequate procedures and controls to appropriately account
for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating losses;
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.
Upon
request, we will provide, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus is delivered,
a copy of the documents incorporated by reference into this prospectus but not delivered with the prospectus. You may request a copy of
these filings, and any exhibits we have specifically incorporated by reference as an exhibit in this prospectus, at no cost by writing
us at the Company address provided below in section titled “Incorporation of Certain Information By 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:
| ● | Annual
Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 13, 2023; |
| ● | Quarterly
Report on Form
10-Q for the period ended March 31, 2023, filed with the SEC on May 11, 2023 and Form
10-Q for the period ended June 30, 2023, filed with the SEC on August 14, 2023, Form 10-Q filed for the period ended September 30, 2023, filed with the SEC on November 14, 2023; |
| ● | Current Reports on Form
8-K filed with the SEC on November 17, 2023; November
13, 2023; October 30,
2023; September 27,
2023; September 15,
2023; August 11, 2023; July
27, 2023; July 17,
2023; July 11, 2023; July
6, 2023; 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; |
| ● | Definitive
Proxy Statement on Schedule 14A, filed with the SEC on June 6, 2023; and |
| ● | The
description of our Common Stock contained in Exhibit 4(vi) to our Annual Report on Form 10-K filed with the SEC on March 13, 2023, including
any amendments thereto or reports filed for the purpose of updating such description. |
In addition, all documents
subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) on or after the date of the initial filing
of the registration statement of which this prospectus is a part and prior to effectiveness of the registration statement, and (ii) 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.
We hereby undertake to
provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or
oral request of any such person, a copy of any and all of the information that has been or may be incorporated by reference in this prospectus,
other than exhibits to such documents. Requests for such copies should be directed to:
Allarity Therapeutics, Inc.
24 School Street, 2nd Floor
Boston, MA 02108
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 13,333,333 Shares of Common Stock
Up to 13,333,333 Series A Common Warrants to
purchase up to 13,333,333 Shares of Common Stock
Up to 13,333,333 Series B Common Warrants to
purchase up to 13,333,333 Shares of Common Stock
Up to 13,333,333 Pre-Funded Warrants to purchase
up to 13,333,333 Shares of Common Stock
Up to 26,666,666Shares of Common Stock Issuable
Upon Exercise of Series A and Series B Common Warrants
Up to 13,333,333 Shares of Common Stock Issuable
Upon Exercise of Pre-Funded Warrants
ALLARITY THERAPEUTICS, INC.
Preliminary Prospectus
Sole Placement Agent
A.G.P.
, 2023
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth
all costs and expenses, other than placement agent fees, payable by us in connection with the sale of the securities being registered.
All amounts shown are estimates except for the SEC registration and FINRA filing fees.
|
|
Amount |
|
SEC registration fee |
|
$ |
2,952 |
|
FINRA filing fee |
|
|
5,000 |
|
Accountants’ fees and expenses |
|
|
55,000 |
|
Legal fees and expenses |
|
|
250,000 |
|
Transfer agent and registrar fees |
|
|
10,000 |
|
Printing fees |
|
|
5,000 |
|
Miscellaneous fees and expenses |
|
|
7,048 |
|
Total Expense |
|
$ |
335,000 |
|
Item 14. Indemnification of Directors and Officers.
Delaware law, our Certificate
of Incorporation and our bylaws provide that we will, in certain situations, indemnify our directors and officers and may indemnify other
employees and other agents, to the fullest extent permitted by law. Any indemnified person is also entitled, subject to certain limitations,
to advancement, direct payment, or reimbursement of reasonable expenses (including attorneys’ fees and disbursements) in advance
of the final disposition of the proceeding.
Our Certificate of Incorporation
limits a director’s liability to the fullest extent permitted under the Delaware General Corporation Law, or DGCL. The DGCL provides
that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors,
except for liability:
| ● | for
any breach of the director’s duty of loyalty to the corporation or its stockholders; |
| ● | for
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
| ● | for
unlawful payment of dividend or unlawful stock purchase or redemption pursuant to the provisions of Section 174 of the DGCL; and |
| ● | for
any transaction from which the director derived an improper personal benefit. |
Section 145(a) of the DGCL
provides, in general, that a corporation may indemnify any person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), because he or she is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the person in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section 145(b) of the
DGCL provides, in general, that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor because the person
is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including
attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made with respect to any claim, issue or matter as to which he or she shall have been adjudged
to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that,
despite the adjudication of liability but in view of all of the circumstances of the case, he or she is fairly and reasonably entitled
to indemnity for such expenses that the Court of Chancery or other adjudicating court shall deem proper.
Section 145(g) of the
DGCL provides, in general, that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power
to indemnify the person against such liability under Section 145 of the DGCL.
If the DGCL is amended to
authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of the directors will
be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
In addition, we intend to
enter into separate indemnification agreements with our directors and officers. These agreements, among other things, require us to indemnify
our directors and officers for certain expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by
a director or officer in any action or proceeding arising out of their services as one of our directors or officers or any other company
or enterprise to which the person provides services at our request.
We anticipate maintaining
a directors’ and officers’ insurance policy pursuant to which our directors and officers are insured against liability for
actions taken in their capacities as directors and officers. We believe these provisions in the Certificate of Incorporation and bylaws
and these indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
Insofar as indemnification
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.
Item 15. Recent Sales of Unregistered Securities.
All share and per share
information presented in this Part II, Item 15 gives effect to the 1-for-35 share consolidation of our Common Stock effective March 24,
2023, and the 1-for-40 share consolidation of our Common Stock effective June 28, 2023.
On May 20, 2021, we entered
into a securities purchase agreement to sell 20,000 shares of our Series A Convertible Preferred Stock, par value $0.0001 per share (the
“Series A Preferred Stock”) and a warrant to purchase 1,443 shares of Common Stock at an initial exercise price of $13,868.40
(the “PIPE Warrant”) to 3i, LP, for an aggregate purchase price of $20 million.
From December 23, 2021 to
June 29, 2023, pursuant to a series of exercise of conversion by 3i, LP, we issued a total of 247,480 shares of Common Stock to 3i, LP
upon the conversion of 18,466 shares of Series A Preferred Stock based on exercise prices ranging from $13,868.40 to $30.00.
In July 2022, in connection
with the appointment of Dr. Roth as our independent director, we granted him options to purchase 16 shares of Common Stock at an exercise
price of $1,792 per share, subject to vesting of 1/36 per month over 36 months following the grant date. The expiration date for the
options is 5 years from date of grant.
In October 2022, in connection
with the appointment of Mr. McLaughlin as our independent director, we granted him options to purchase 16 shares of Common Stock at an
exercise price of $1,540 per share, subject to vesting of 1/36 per month over 36 months following the grant date. The expiration date
for the options is 5 years from date of grant.
On January 12, 2023, in
connection with entering into a new employment contract, Mr. Cullem may elect to receive up to $30,000 of his base salary in restricted
stock grants. Any such restricted stock grants will be made quarterly, at the start of each calendar quarter, at the stock fair market
value on the 1st day of each calendar quarter. In addition, subject to achieving certain conditions, Mr. Cullem was granted stock options
which will have an exercise price equal to the fair market value of the Company’s shares on the grant date and a term of 10 years,
in an amount as follows: (i) 3.5% of the Company’s issued and outstanding shares of Common Stock immediately after a financing;
provided, however, that such amount will not exceed 50% of the options available to be granted under the Company’s 2021 Equity
Incentive Plan (“Grant Limitation”); and (ii) 2.0% of the Company’s issued and outstanding shares of Common Stock immediately
after a financing; provided however, that such grant will not exceed the Grant Limitation.
On January 12, 2023, in
connection with entering into a new employment contract, Ms. Brown received stock options in the amount of 0.75% of the Company’s
issued and outstanding shares of Common Stock immediately after a financing granted pursuant to the 2021 Equity Incentive Plan. The exercise
price will be the fair market value of Company’s shares on the date of grant. The stock options will vest ratably over a 48 month
period commencing July 1, 2022, and have a term of 10 years.
On February 28, 2023, we entered
into a securities purchase agreement with 3i, LP for the purchase and sale of 50,000 shares of Series C Convertible Redeemable Preferred
Stock, par value of $0.0001 (the “Series C Shares”) per share at a purchase price of $24.00 per share, for a subscription
receivable in the aggregate amount equal to the total purchase price of $1.2 million.
From November 2022 to
April 12, 2023, pursuant to the terms of a Secured Note Purchase Agreement dated November 22, 2022, we sold 3i, LP the following four
secured promissory notes (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, par value of $0.0001 per share (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.
On April 19, 2023, 3i, LP,
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. On April 21, 2023, the Note Conversion Shares were issued to 3i, LP and the April
Note was cancelled.
On April 20, 2023, we
entered into a Modification and Exchange Agreement with 3i, LP pursuant to which we agreed to, among other things, (i) amend and restate
the Certificate of Designations for the Series A Convertible Preferred Stock, which among other things, eliminates the Series A Preferred
Stock redemption right and dividend (except for certain exceptions as specified in the Amended and Restated Certificate of Designations
for the Series A Preferred Stock filed with the Secretary of State of the State of Delaware), 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 21, 2023 public offering, (ii) exchange 50,000 shares of Series C Preferred Stock beneficially owned by 3i, LP for 5,577 shares
of Series A Preferred Stock (the “Exchange Shares”), and (iii) issue a new warrant (“Exchange Warrant”) which
reflects an exercise price of $30.00 and represents a right to acquire 315,085 shares of Common Stock in exchange for the PIPE Warrant.
Upon the closing of the public offering in July 2023, the number of shares exercisable under the Exchange Warrant and its exercise price
was adjusted to 2,100,565 shares of Common Stock and $4.50 per share, respectively. Subsequently, on July 26, 2023, pursuant to Section
2(e) of the Exchange Warrant, due to the event market price on the 16th day after the June Reverse Stock Split being less than the exercise
price of the Exchange Warrant then in effect, the number of shares exercisable under such Warrant, the exercise price was further adjusted
to 3,134,693 shares and $3.0155 per share. In connection with the transactions contemplated by the Inducement Letter (as defined below),
pursuant to the Waiver (as defined below), the exercise price and the shares of Common Stock exercisable under the Exchange Warrant was
further adjusted to $1.00 per share and 9,452,667 shares of Common Stock, which is subject to further adjustment upon closing of this
offering.
On June 29, 2023, the
Company entered into a Secured Note Purchase Agreement with 3i, LP (the “June 2023 Purchase Agreement”) for a bridge loan
in order to provide the Company with more time to secure additional financings. On June 30, 2023, 3i, LP purchased a secured promissory
note for a principal amount of $350,000 (“3i June Promissory Note”) 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 dated June 29, 2023. Under the 3i June Promissory Note, the outstanding obligations thereunder, including accrued interest,
will be paid in full at the next financing from the gross proceeds of such financing; provided, however, that if the gross proceeds from
such 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 486 shares of the Company’s Series A Convertible Preferred
Stock, par value $0.0001 per share (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 the Certificate of Designation of Series A Preferred Stock, as amended and currently in effect (the “Series A COD”),
then the conversion price 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.
In September 2023, we
entered into the Inducement Letter dated September 14, 2023 (the “Inducement Letter”) with each of Armistice Capital Master
Fund Ltd. and Sabby Volatility Warrant Master Fund, Ltd. (“September Investors”) who were the holders of existing common
stock purchase warrants issued (i) in the public offering that closed in April 2023 and (ii) in the public offering that closed in July
2023 (the “Existing Warrants”). Pursuant to the Inducement Letter, the September Investors agreed to exercise for cash their
respective Existing Warrants to purchase an aggregate of up to 2,438,889 shares of the Company’s Common Stock (the “Existing
Warrant Shares”), at a reduced exercise price of $1.00 per share, in consideration for the Company’s agreement to issue a
new unregistered common stock purchase warrant to purchase up to 4,877,778 shares, which is equal to 200% of the number of Existing Warrant
Shares issued (the “Inducement Warrants”), pursuant to each Existing Warrant exercise for an aggregate amount of up to 4,877,778
shares of Common Stock (the “Inducement Warrant Shares”), exercisable for 5 years from the issue date, at an exercise price
of $1.00, subject to adjustment. Upon execution of the Inducement Letter by each of the September Investors company issued the Inducement
Warrants to the September Investors pursuant to a private placement. In addition, the Company adjusted the exercise price of all outstanding
warrants acquired in the public offerings, which closed in April 2023 and July 2023, to $1.00 per share. The Inducement Warrant Shares
were registered on a registration statement on Form S-3, which became effective on October 19, 2023.
In connection with the
Inducement Letter and the transactions contemplated therein, the Company and 3i, LP entered into a limited waiver agreement (the “Waiver”)
pursuant to which 3i, LP agreed to allow the filing of the resale Registration Statement registering the Inducement Warrant Shares for
resale by the September Investors not otherwise permitted under certain agreements with 3i, LP. In consideration of entering in the Waiver,
the Company agreed to amend the “Conversion Price” of the Series A Convertible Preferred Stock to equal $1.00 as soon as
practicable. On September 22, 2023, the Company filed the Fourth Certificate of Amendment to Amended and Restated Certificate of Designations
of Series A Convertible Preferred Stock (“Fourth Amendment”) with the Secretary of State of the State of Delaware to reflect
the new conversion price of the Series A Preferred Stock of $1.00.
The offers, sales, and
issuances of the 3i June Promissory Note, the Repayment Shares and common shares issuable upon conversion of the Repayment Shares, and
options to Dr. Roth, Mr. McLaughlin, Mr. Cullem and Ms. Brown; and Series A Preferred Stock and PIPE Warrant, 3i, LP Promissory Notes,
Series C Preferred Stock, the April Note, the Note Conversion Shares to 3i, LP, the Inducement Warrants and the Inducement Warrant Shares
were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Rule 506
of Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. Each of the recipients of securities
in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act. The conversions
of Series A Preferred Stock into Common Stock, and the issuance of the Exchange Shares and Exchange Warrant were exempt from registration
pursuant to Section 3(a)(9).
Item 16. Exhibits and Financial Statement Schedules.
Form
The exhibits listed below are filed
as part of this registration statement:
Exhibit No. |
|
Description |
1.1** |
|
Form of Placement Agency Agreement |
2.1(e) |
|
Amended and Restated Plan of Reorganization and Asset Purchase Agreement by and among Allarity Therapeutics, Inc. a Delaware corporation, Allarity Acquisition Subsidiary, a Delaware corporation and Allarity Therapeutics A/S, an Aktieselskab organized under the laws of Denmark, dated as of September 23, 2021 |
3.1(a) |
|
Certificate of Incorporation of Allarity Therapeutics, Inc. |
3.2(b) |
|
Certificate of Amendment to the Certificate of Incorporation of Allarity Therapeutics, Inc. |
3.3(c) |
|
Amended and Restated Bylaws of Allarity Therapeutics, Inc. |
3.4(m) |
|
Amendment No. 1 to Amended and Restated Bylaws of Allarity Therapeutics, Inc. |
3.5(g) |
|
Certificate of Designations of Allarity Therapeutics, Inc. relating to the Series A Convertible Preferred Stock |
3.6(q) |
|
Amendment to Certificate of Designation of the Series A Convertible Preferred Stock |
3.7(q) |
|
Certificate of Designation of the Series B Preferred Stock |
3.8(s) |
|
Certificate of Designation of the Series C Preferred Stock |
3.9(s) |
|
Certificate of Amendment to Certificate of Designation of Series C Preferred Stock |
3.10(u) |
|
Second Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. |
3.11(v) |
|
Third Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. |
3.12(aa) |
|
Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock of Allarity Therapeutics, Inc. |
3.13(bb) |
|
First Certificate of Amendment to Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock |
3.14(cc) |
|
Fourth Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. |
3.15(dd) |
|
Second Amendment to Certificate of Designation (Series A Preferred Stock) |
3.16(ff) |
|
Third Certificate of Amendment to Certificate of Designation (Series A Preferred Stock) |
3.17(hh) |
|
Fourth Certificate of Amendment (Series A Preferred Stock) |
4.1(b) |
|
Specimen Common Stock Certificate of Allarity Therapeutics, Inc. |
4.2(aa) |
|
Warrant to Purchase Common Stock (3i, LP) |
4.3(aa) |
|
Form of Pre-Funded Warrant (April 2023) |
4.4(aa) |
|
Form of Common Warrant (April 2023) |
4.5(aa) |
|
Modification and Exchange
Warrant |
4.6(ee) |
|
Form of Pre-Funded Warrant (July 2023) |
4.7(ee) |
|
Form of Common Warrant(July 2023) |
4.8(ff) |
|
Form of Amended and Restated Common Stock Purchase Warrant (July 2023) |
4.9(gg) |
|
Form of New Warrant |
4.10** |
|
Form of Pre-Funded Warrant |
4.11** |
|
Form of Series A Common Warrant |
4.12** |
|
Form of Series B Common Warrant |
5.1** |
|
Opinion of Lewis Brisbois Bisgaard & Smith LLP |
10.1#(e) |
|
Allarity Therapeutics, Inc. 2021 Equity Incentive Plan |
10.2†(a) |
|
Exclusive License Agreement between Oncology Venture A/S and Smerud Medical Research International As Dated as of June 26, 2020 |
10.3†(a) |
|
Amended and Restated License Agreement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated January 2021 |
10.4†(a) |
|
Exclusive License Agreement between Oncology Venture, APS and 2-BBB Medicines BV, dated as of March 27, 2017 |
10.5†(c) |
|
Development, Option and License Agreement between Oncology Venture ApS and R-Pharm US Operating LLC, dated March 1, 2019 |
Exhibit No. |
|
Description |
10.6†(c) |
|
Exclusive License Agreement between Oncology Venture, ApS and Eisai, Inc., dated as of July 6, 2017 |
10.7†(c) |
|
License Agreement between Novartis Pharma Ag and Oncology Venture, ApS, dated April 6, 2018 |
10.8+(a) |
|
Securities Purchase Agreement dated May 20, 2021 between Allarity Therapeutics, Inc. and 3i, LP |
10.9(a) |
|
Registration Rights Agreement dated May 20, 2021 between Allarity Therapeutics, Inc. and 3i, LP |
10.10†(a) |
|
Asset Purchase Agreement dated July 23, 2021 between Allarity Therapeutics A/S and Lantern Pharma Inc. |
10.11(c) |
|
First Amendment to the Exclusive License Agreement between Eisai and Allarity Therapeutics A/S dated December 20, 2020. |
10.12(d) |
|
Second Amendment to Exclusive License Agreement between Oncology Venture, ApS and Eisai, Inc. dated as of August 3, 2021. |
10.13#(f) |
|
Employment Agreement by and between Allarity Therapeutics, Inc. and James G. Cullem |
10.14#(f) |
|
Employment Agreement by and between Allarity Therapeutics, Inc. and Marie Foegh, M.D. |
10.15(h) |
|
Asset Purchase Agreement between Allarity Therapeutics, Inc. and Allarity Therapeutics A/S dated December 17, 2021 |
10.16(k) |
|
Assignment and Assumption Agreement between Allarity Therapeutics, Inc. and Allarity A/S |
10.17†(k) |
|
Exclusive License Agreement with Oncoheroes Bioscience, Inc. dated January 2, 2022 (Stenoparib) |
10.18†(k) |
|
Exclusive License Agreement with Oncoheroes Bioscience, Inc. dated January 2, 2022 (Dovitnib) |
10.19†(k) |
|
Amended and Restated License Agreement among Allarity Therapeutics Europe ApS, LiPlasome Pharma ApS, and Chosa ApS dated March 28, 2022 |
10.20†(k) |
|
Support Agreement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated March 28, 2022 |
10.21(i) |
|
First Amendment to License Agreement between Novartis Pharma Ag and Allarity Therapeutics Europe ApS |
10.22(i) |
|
Convertible Promissory Note |
10.23(j) |
|
Forbearance Agreement and Waiver |
10.24(l) |
|
First Amendment to Forbearance and Waiver |
10.25†#(o) |
|
Separation Agreement with Steve Carchedi |
10.26†#(o) |
|
Separation Agreement with Jens Knudsen |
10.27(o) |
|
Second Amendment to Development Option & License Agreement |
10.28†(p) |
|
Second Amendment to License Agreement with Novartis Pharma AG |
10.29(q) |
|
Secured Note Purchase Agreement |
10.30(q) |
|
Form of Secured Promissory Note |
10.31(q) |
|
Security Agreement |
10.32(r) |
|
Employment Agreement with James G. Cullem |
10.33(r) |
|
Employment Agreement with Joan Brown |
10.34(t) |
|
Letter Agreement with 3i, LP dated December 8, 2022 |
10.35(t) |
|
Letter Agreement with 3i, LP dated January 23, 2023 |
10.36(s) |
|
Form of Securities Purchase Agreement Series C Preferred Stock |
10.37(s) |
|
Form of Registration Rights Agreement |
10.38(s) |
|
Limited Waiver Agreement |
10.39(aa) |
|
Form of Securities Purchase Agreement (April Offering) |
10.40(y) |
|
Form of Lock- Up Agreement (April Offering) |
10.41(z) |
|
First Amendment to Secured Note Purchase Agreement |
10.42(z) |
|
First Amendment to Security Agreement |
10.43(z) |
|
Form of Secured Promissory Note (2023) |
10.44(aa) |
|
Secured Promissory Note |
10.45(aa) |
|
Modification and Exchange Agreement |
10.46(aa) |
|
Cancellation of Debt Agreement |
10.47(aa) |
|
First Amendment to Registration Rights Agreement |
10.48(aa) |
|
Limited Waiver Agreement |
10.49(bb) |
|
Amendment to Modification and Exchange Agreement |
10.50(ee) |
|
Form of Securities Purchase Agreement |
10.51(bb) |
|
Fourth Amendment to the Exclusive License Agreement with Eisai, Inc. |
10.52(ee) |
|
Third Amendment to the Exclusive License Agreement with Eisai, Inc. |
10.53(ee) |
|
Form of Limited Waiver and Amendment Agreement |
|
(a) |
Incorporated by reference from the Registration Statement on Form S-4 filed with the SEC on August 20, 2021. |
|
(b) |
Incorporated by reference from Amendment No. 1 to Registration Statement on Form S-4 refiled with the SEC on October 20, 2021. |
|
(c) |
Incorporated by reference from Amendment No. 2 to Registration Statement on Form S-4 refiled with the SEC on October 20, 2021. |
|
(d) |
Incorporated by reference from Amendment No. 4 to Registration Statement on Form S-4 filed with the SEC on November 2, 2021. |
|
(e) |
Incorporated by reference from Amendment No. 2 to Registration Statement on Form S-1 filed with the SEC on December 6, 2021. |
|
(f) |
Incorporated by reference from Form 8-K filed with the SEC on December 10, 2021. |
|
(g) |
Incorporated by reference from Form 8-K filed with the SEC on December 20, 2021. |
|
(h) |
Incorporated by reference from Form 8-K filed with the SEC on December 22, 2021. |
|
(i) |
Incorporated by reference from Form 8-K filed with the SEC on April 18, 2022. |
|
(j) |
Incorporated by reference from Form 8-K filed with the SEC on May 6, 2022. |
|
(k) |
Incorporate by reference from Form 10-K filed with the SEC on May 17, 2022. |
|
(l) |
Incorporated by reference from Form 8-K filed with the SEC on June 10, 2022. |
|
(m) |
Incorporated by reference from Form 8-K filed with the SEC on July 11, 2022. |
|
(n) |
Incorporated by reference from Form 8-K filed with the SEC on August 12, 2022, as amended on August 24, 2022. |
|
(o) |
Incorporated by reference from Form 10-Q filed with the SEC on October 7, 2022. |
|
(p) |
Incorporated by reference from Form 8-K filed with the SEC on September 30, 2022. |
|
(q) |
Incorporated by reference from Form 8-K filed with the SEC on November 25, 2022. |
|
(r) |
Incorporated by reference from Form 8-K filed with the SEC on January 19, 2023. |
|
(s) |
Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023. |
|
(t) |
Incorporated by reference from Form 10-K filed with the SEC on March 13, 2023. |
|
(u) |
Incorporated by reference from Form 8-K filed with the SEC on March 20, 2023. |
|
(v) |
Incorporated by reference from Form 8-K filed with the SEC on March 24, 2023. |
|
(x) |
Incorporated by reference from Form S-1 filed with the SEC on March 14, 2023. |
|
(y) |
Incorporated by reference from Form S-1 filed with the SEC on March 28, 2023. |
|
(z) |
Incorporated by reference from Form 8-K filed with the SEC on April 12, 2023. |
|
(aa) |
Incorporated by reference from Form 8-K filed with the SEC on April 25, 2023. |
|
(bb) |
Incorporated by reference from Form 8-K filed with the SEC on June 1, 2023. |
|
(cc) |
Incorporated by reference from Form 8-K filed with the SEC on June 28, 2023. |
|
(dd) |
Incorporated by reference from Form 8-K filed with the SEC on June, 30, 2023. |
|
(ee) |
Incorporated by reference from Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on June 30, 2023. |
|
(ff) |
Incorporated by reference from Form 8-K filed with the SEC on July 11, 2023. |
|
(gg) |
Incorporated by reference from Form 8-K filed with the SEC on September 15, 2023. |
|
(hh) |
Incorporated by reference to the Company’s Form 8-K filed on September 27, 2023. |
|
(ii) |
Incorporated by reference
to the Company’s Form S-1 filed on October 30, 2023 |
|
|
|
|
† |
Certain portions of this exhibit were be omitted because they are not material and would likely cause competitive harm to the registrant if disclosed. |
|
* |
Filed herewith. |
|
** |
Previously filed |
|
# |
Indicates management contract or compensatory plan or arrangement. |
Item 17. Undertakings
The undersigned registrant
hereby undertakes:
| A. | To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To
include any prospectus required by section 10(a)(3) of the Securities Act; |
| (ii) | To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement; and |
| (iii) | To
include any material information with respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration statement; |
| B. | That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof. |
| C. | To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering. |
| D. | That,
for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as
part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use. |
| E. | That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of
the securities, that in a primary offering of securities of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424; |
| (ii) | Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant; |
| (iii) | The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and |
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| F. | That
prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for by the applicable registration form with respect to re-offerings
by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
| G. | That
every prospectus (i) that is filed pursuant to paragraph (F) immediately preceding or (ii) that purports to meet the requirements
of section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof. |
| H. | Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| I. | The
undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the request. |
| J. | To
supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it became effective. |
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, Commonwealth of Massachusetts on December 6, 2023.
|
ALLARITY THERAPEUTICS, INC. |
|
|
|
By: |
/s/ James G. Cullem |
|
Name: |
James G. Cullem |
|
Title: |
Chief Executive Officer |
Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement on Form S-1 has been signed below by the following persons in the
capacities indicated and on the dates indicated.
/s/
James G. Cullem |
|
Chief Executive Officer
and Director |
|
December
6, 2023 |
James G. Cullem |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Joan
Brown |
|
Chief Financial Officer |
|
December 6, 2023 |
Joan Brown |
|
(Principal Financial and Accounting Officer) |
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|
|
|
|
|
|
* |
|
Chairman of the Board |
|
December 6, 2023 |
Gerald McLaughlin |
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|
|
|
|
|
|
|
|
* |
|
Director |
|
December 6, 2023 |
Laura Benjamin |
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
December 6, 2023 |
Joe Vazzano |
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|
|
|
|
|
|
|
|
* |
|
Director |
|
December 6, 2023 |
Thomas Jensen |
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|
|
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By: |
* /s/ James G. Cullem |
|
|
Attorney-in-Fact |
|
II-10
S-1/A
true
0001860657
0001860657
2023-01-01
2023-09-30
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer the Securities provided that (1) AGP and the Company
receive a signed lock-up letter agreement (in the form of this Letter Agreement) for the balance of the Restriction Period from each donee,
trustee, distributee, or transferee, as the case may be, prior to such transfer, (2) any such transfer shall not involve a disposition
for value, (3) such transfer is not required to be reported with the Securities and Exchange Commission in accordance with the Exchange
Act and no report of such transfer shall be made voluntarily, and (4) neither the undersigned nor any donee, trustee, distributee
or transferee, as the case may be, otherwise voluntarily effects any public filing or report regarding such transfers, with respect to
transfer:
In addition, notwithstanding
the foregoing, this Letter Agreement shall not restrict the delivery of shares of Common Stock to the undersigned upon (i) exercise any
options granted under any employee benefit plan of the Company; provided that any shares of Common Stock or Securities acquired in connection
with any such exercise will be subject to the restrictions set forth in this Letter Agreement, or (ii) the exercise of warrants; provided
that such shares of Common Stock delivered to the undersigned in connection with such exercise are subject to the restrictions set forth
in this Letter Agreement.
Furthermore, the
undersigned may enter into any new plan established in compliance with Rule 10b5-1 of the Exchange Act; provided that (i) such plan may
only be established if no public announcement or filing with the Securities and Exchange Commission, or other applicable regulatory authority,
is made in connection with the establishment of such plan during the Restriction Period and (ii) no sale of shares of Common Stock are
made pursuant to such plan during the Restriction Period.
The undersigned
acknowledges that the execution, delivery and performance of this Letter Agreement is a material inducement to AGP and the Company to
complete the transactions contemplated by the Purchase Agreement and AGP shall be entitled to specific performance of the undersigned’s
obligations hereunder. The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform
this Letter Agreement, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit
from the closing of the transactions contemplated by the Purchase Agreement.
This Letter Agreement may
not be amended or otherwise modified in any respect without the written consent of AGP and the undersigned. This Letter Agreement shall
be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The
undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District
of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action or proceeding arising out
of or relating to this Letter Agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim
that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in an inconvenient
forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at
the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
This Letter Agreement shall
be binding on successors and assigns of the undersigned with respect to the Securities and any such successor or assign shall enter into
a similar agreement for the benefit of AGP. This Letter Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provisions hereof be enforced by, any of other Person.
It is understood that, this
Letter Agreement shall automatically terminate, and the undersigned shall be released from its obligations hereunder, upon the earliest
to occur, if any, of (i) prior to the execution of the Purchase Agreement, the Company advises AGP in writing that it has determined not
to proceed with the transaction, (ii) the Purchase Agreement is executed but is terminated prior to payment for and delivery of the securities
thereunder, or (iii) December 31, 2023, in the event that the Purchase Agreement has not been executed by such date.
This Letter Agreement may
be executed in two or more counterparts, all of which when taken together may be considered one and the same agreement.
By signing below, AGP agrees
to enforce the restrictions on transfer set forth in this Letter Agreement.
We consent to the incorporation by reference in
this Amendment No. 2 to the Registration Statement (No. 333-275224) on Form S-1 and related Prospectus of Allarity Therapeutics, Inc.
of our report dated March 9, 2023, relating to the consolidated financial statements of Allarity Therapeutics, Inc. appearing in the Annual
Report on Form 10-K of Allarity Therapeutics, Inc. for the year ended December 31, 2022.
We also consent to the reference to our firm under the heading “Experts”
in such Prospectus.
/s/ Wolf & Company, P.C.
Wolf & Company, P.C.