Allarity Therapeutics Inc

Previous wording

We have incurred net losses in each year since inception. Our net losses were $3.8 million and $3.4 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $98.3 million and cash of $312 thousand. Substantially all our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Current wording

We have incurred net losses in each year since inception. Our net losses were $5.0 million and $5.7 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $99.9 million and cash and cash equivalents of $19.2 million. Substantially all our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Previous wording

Results of Operations for the Three Months Ended March 31, 2024, and 2023 (unaudited) (in thousands, except where otherwise noted)

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited) (in thousands, except where otherwise noted)

Previous wording

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

The increase of $743 thousand in research and development expenses was primarily because manufacturing and supplies expenses increased by $524 thousand, research study expenses increased by $113 thousand, contractors and consultants expenses increased by $51 thousand, stock based compensation expense increased by $28 thousand, and other research expense increased by $2 thousand; offset by increased tax credits of $56 thousand, decreased staffing expenses of $71 thousand, and decreased amortization of $8 thousand. Manufacturing and supplies expenses have increased because of increased drug manufacturing. Staffing and contractor costs have decreased as a result of cost-cutting measures.

Current wording

The increase of $696 in research and development expenses was primarily because of increased manufacturing and supplies expenses of $442, research study costs of $317, milestone payments of $100, and patent costs of $37; offset by increased tax credits of $51 and decreases in all other expenses as follows: contractors by $37, staffing by $93, amortization by $16 and other by $3. Manufacturing and supplies expenses have increased because of increased drug manufacturing costs. Staffing and contractor costs have decreased because of cost-cutting measures.

Previous wording

General and administrative expenses decreased by $171 thousand for the three months ended March 31, 2024, compared to March 31, 2023. The decrease was primarily due to a decrease in insurance expense of $307 thousand, audit and legal expenses of $54 thousand, financial consultants’ expense of $39 thousand, communications expenses of $27 thousand, listings expenses of $16 thousand, finance expenses of $6 thousand, and other expenses of $9 thousand; offset by increased staffing expenses of $115 thousand, and Delaware franchise tax of $162 thousand. Staffing costs have increased as a result of severance accruals.

Current wording

General and administrative expenses decreased by $738 for the three months ended June 30, 2024, compared to June 30, 2023. The decrease was primarily due to increased audit and legal expenses of $327 and other expenses of $33; offset by decreases in financial consulting costs of $356, finance costs of $374, insurance of $188, staffing costs of $140, communication expenses of $40.

Previous wording

Other income (expense) of $316 thousand recognized in the three months ended March 31, 2023, consisted primarily of a $309 thousand fair value adjustment to derivative and warrant liabilities, foreign exchange gains of $95, and interest income of $4, offset by ($92) in interest expenses.

Current wording

Other income (expense) of $2,092 recognized in the six months ended June 30, 2023, consisted primarily of a $2,250 fair value adjustment to derivative and warrant liabilities, foreign exchange gains of $69, and interest income of $7, offset by interest expense of ($234).

Previous wording

Since our inception through March 31, 2024, our operations have been financed primarily by the sale of convertible promissory notes and the sale and issuance of our securities. As of March 31, 2024, we had $312 in cash, and an accumulated deficit of $98.3 million. We had a working capital deficit of $15.7 million.

Current wording

Since our inception through June 30, 2024, our operations have been financed primarily by the sale of convertible promissory notes and the sale and issuance of our securities. As of June 30, 2024, we had $19.2 million in cash and cash equivalents, and an accumulated deficit of $99.9 million.

Previous wording

As of March 31, 2024, the Company’s cash deposits of $312 were determined to be insufficient to fund its current operating plan and planned capital expenditures for the next month. On March 21, 2024, the Company commenced an at the market offering of its common shares and as of March 31, 2024, had sold 6,792 common shares for net proceeds of $40. Subsequent to March 31, 2024, an additional 8,259,150 shares of our common stock were sold at the market for net proceeds of $15,572. In light of the Company’s cash position as of the date of this Quarterly Report, the Company does not have sufficient funds for its current operations and planned capital expenditures. As discussed above the Company intends to seek capital through sale of its securities or other sources. There are no assurances, however, that the Company will be successful in raising additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise capital or enter into other such arrangements if and when needed would have a negative impact on its business, results of operations and financial condition and its ability to develop its product candidates.

Current wording

On March 21, 2024, the Company commenced an at the market offering of shares of our Common Stock and as of June 30, 2024, had sold 31,891,433 shares of our Common Stock for net proceeds of $27,689. Subsequent to June 30, 2024, an additional 7,340,312 shares of our common stock were sold at the market for net proceeds of $1,404. In light of the Company’s cash position as of the date of this Quarterly Report, the Company has sufficient funds for its current operations and planned capital expenditures. As discussed above the Company intends to seek capital through sale of its securities or other sources. There are no assurances, however, that the Company will be successful in raising additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise capital or enter into other such arrangements if and when needed would have a negative impact on its business, results of operations and financial condition and its ability to develop its product candidates.

Previous wording

We enter into agreements in the normal course of business with vendors for preclinical studies, clinical trials, and other service providers for operating purposes. We have not included these payments in the table of contractual obligations above since these contracts are generally cancellable at any time by us following a certain period after notice and therefore, we believe that our non-cancellable obligations under these agreements are not material.

Current wording

We enter into agreements in the normal course of business with vendors for preclinical studies, clinical trials, and other service providers for operating purposes. We have not included these payments in a table of contractual obligations since these contracts are generally cancellable at any time by us following a certain period after notice and therefore, we believe that our non-cancellable obligations under these agreements are not material.

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities was approximately $1.5 million compared to approximately $3.2 million for the three months ended March 31, 2023. The $1.7 million decrease in net cash used in operating activities was primarily the result of an increase in cash provided non-cash operating assets of $2.3 million, offset by an increased loss of $500 thousand and higher non-cash operating expenses of $100 thousand.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities was approximately $8.7 million compared to approximately $5.7 million for the six months ended June 30, 2023. The $3.0 million increase in net cash used in operating activities was primarily the result of higher non-cash operating expenses of $890 thousand and a decrease in cash provided by non-cash operating assets of $2.8 million, offset by a decreased loss of $660 thousand.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities was approximately $1.4 million compared to $1.2 million for the three months ended March 31, 2023. The increase in net cash provided by investing activities was primarily due to proceeds from the sale of the 2024 Notes to 3i during the three months ended March 31, 2024.

Current wording

The increase in net cash provided by investing activities was primarily due to the receipt of $27,689 in net proceeds from the issuance of common stock.

Previous wording

We believe that our existing cash and cash equivalents 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 at least twelve months from the date of this Quarterly Report. Our estimate as to how long we expect our cash to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

Current wording

We believe that our existing cash and cash equivalents will be sufficient to fund our anticipated expenditures and commitments for the next twelve months. Our estimate as to how long we expect our cash to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

Previous wording

Our management’s discussion and analysis of financial condition and results of operations is based upon our unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024 and 2023, and our audited consolidated financial statements for the years ended December 31, 2023 and 2022, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Current wording

Our management’s discussion and analysis of financial condition and results of operations is based upon our unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2024 and 2023, and our audited consolidated financial statements for the years ended December 31, 2023 and 2022, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Previous wording

Our significant accounting policies are described in the notes to our consolidated financial statements for the years ended December 31, 2023 and 2022, included in the Form 10-K, and there have been no significant changes to our significant accounting policies during the three months ended March 31, 2024. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes.

Current wording

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2023 included in the Form 10-K, and there have been no significant changes to our significant accounting policies during the six months ended June 30, 2024. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes.

Previous wording

See the sections titled “Recently adopted accounting pronouncements”in Note 2(cc) and*“Recently issued accounting pronouncements not yet adopted*” in Note 2*(x)* to the Company’s consolidated financial statements for the years ended December 31, 2023 and 2022, respectively, appearing in the Form 10-K; and in Note 2*(h)* to the Company’s unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024 and 2023.

Current wording

See the sections titled “Recently adopted accounting pronouncements”in Note 2(cc) and*“Recently issued accounting pronouncements not yet adopted*” in Note 2*(x)* to the Company’s consolidated financial statements for the year ended December 31, 2023 and 2022, appearing in the Form 10-K; and in Note 2*(g)* to the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2024 and 2023.