Allarity Therapeutics, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Principal Activities and Basis of Presentation

Background

Allarity Therapeutics, Inc. and Subsidiaries (the “Company”) is a clinical stage pharmaceutical company that develops drugs for the personalized treatment of cancer using drug specific companion diagnostics generated by its proprietary drug response predictor technology, DRP®. Additionally, the Company, through its Danish subsidiary, Allarity Denmark (previously Oncology Venture ApS), specializes in the research and development of anti-cancer drugs.

The Company’s principal operations are located at Venlighedsvej1, 2970 Horsholm, Denmark. The Company’s business address in the United States is located at123 E Tarpon Ave, Tarpon Springs, FL34689.

Liquidity

The accompanying unaudited condensed interim consolidated financial statements (the “Financial Statements”) have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

Pursuant to the requirements of Accounting Standard Codification (“ASC”)205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern withinone year after the date the accompanying Financial Statements are issued. The Company had an accumulated deficit of $126.8 million as of* September30,* 2025. Further, the Company incurred a net loss of $7.7 million and experienced negative cash flows from operations of $11.6 million for thenine months ended* September 30, 2025.Based on the Company’s current operating plan, it estimates that its existing cash, cash equivalents and restricted cash of $16.9 million as of September30,* 2025 will be sufficient to enable the Company to fund its operating expenses and capital requirements through at least the next12 months from the issuance of these Financial Statements.

While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for the next12 months from the issuance date of the Financial Statements, the Company’s liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutivethird-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to the DRP or stenoparib; (4) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company* may*have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan.

Reverse Stock Splits

On* April 9, 2024,and September 11, 2024,the Company effected a1*-for-20 reverse stock split and1-for-30 reverse stock split, respectively, of the shares of common stock of the Company (collectively, the “Reverse Stock Splits”). All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Splits for all periods presented, unless otherwise indicated. Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock, preferred stock and warrants outstanding on* September 12, 2024,*which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants.No fractional shares were issued in connection with the Reverse Stock Splits. If, as a result of the Reverse Stock Splits, a stockholder would otherwise have been entitled to a fractional share, each fractional share was rounded up to the next whole number.

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2. Summary of Significant Accounting Policies

There have beenno new or material changes to the significant accounting policies discussed in Form10-K for the year ended* December 31, 2024,*that are of significance, or potential significance, to the Company.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared on an accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of* September30,* 2025, our results of operations and stockholders’ equity for the three, six, andnine months ended* September30,* 2025 and2024, and cash flows for thenine months ended* September30,* 2025 and2024. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to thethree andnine month periods are also unaudited. The results of operations for thethree andnine months ended* September30,* 2025 arenot necessarily indicative of the results to be expected for the year ending* December31,* 2025 or for any other future annual or interim period. The condensed consolidated balance sheet data as of* December31,* 2024 was derived from our audited financial statements, but doesnot include all disclosures required by GAAP. The condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form10-K for the year ended* December**31,* 2024 that was filed with the Securities and Exchange Commission (“SEC”), on* March 31, 2025.*

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries:

All intercompany transactions and balances, including unrealized profits from intercompany sales, have been eliminated upon consolidation.

Use of Estimates

The preparation of Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting years. Significant estimates and assumptions reflected in these consolidated financial statements include, but arenot limited to, the fair value of the Series A preferred shares, warrants,3i Exchange Warrants, convertible debt, and the accrual for research and development expenses, share based compensation expense, and income tax uncertainties and valuation allowances. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are periodically reviewed considering reasonable changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known and if material, their effects are disclosed in the notes to the consolidated financial statements. Actual results could differ from those estimates or assumptions.

Risks and Uncertainties

The Company is subject to risks common to early-stage companies in the biopharmaceutical industry including, butnot limited to, uncertainties related to clinical effectiveness of products, commercialization of products, regulatory approvals, dependence on key products, key personnel andthird-party service providers such as contract research organizations (“CROs”), protection of intellectual property rights, the need and ability to obtain additional financing and the ability to make milestone, royalty or other payments due under any license, collaboration or supply agreements.

Foreign currency and currency translation

The functional currency is the currency of the primary economic environment in which an entity’s operations are conducted. The Company and its subsidiaries operate mainly in Denmark and the United States. The functional currencies of the Company’s subsidiaries are their local currency.

The Company’s reporting currency is the U.S. dollar. The Company translates the assets and liabilities of its Denmark subsidiaries into the U.S. dollar at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during each monthly period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a component of accumulated other comprehensive loss.

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Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net loss for the respective periods.

Adjustments that arise from exchange rate translations are included in other comprehensive loss in the consolidated statements of operations and comprehensive loss as incurred. During thethree months ended* September 30, 2025and2024*, the Company recorded foreign exchange gains (losses) of ($0.2) million and $0.2 million, respectively. During thenine months ended* September**30,* 2025 and2024, the Company recorded foreign exchange gains (losses) of ($2.1) million and $0.3 million, respectively.

Concentrations of credit risk and of significant suppliers

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents in financial institutions in amounts that could exceed government-insured limits. The Company doesnot believe it is subject to additional credit risks beyond those normally associated with commercial banking relationships. The Company hasnot experienced losses on its cash and cash equivalents accounts and management believes, based upon the quality of the financial institutions, that the credit risk regarding these deposits isnot significant. The Company is dependent onthird-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply its requirements for supplies and raw materials related to these programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials.

Cash and cash equivalents

The Company maintains deposits primarily in financial institutions, which* mayat times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). The Company hasnot* experienced any losses related to amounts in excess of FDIC limits. The Company considers all highly liquid investments with a maturity ofthree months or less when purchased to be cash equivalents. The Company hadno cash equivalents on* September**30,* 2025 and* December 31, 2024.*

Property, plant and equipment

Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets as follows:

Accumulated other comprehensive loss

Accumulated other comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with shareholders. The Company records unrealized gains and losses related to foreign currency translation and instrument specific credit risk as components of other accumulated comprehensive loss in the condensed consolidated statements of operations and comprehensive loss. During thethree andnine months ended* September 30, 2025* and2024, the Company’s other comprehensive (loss) and gain was comprised of currency translation adjustments.

Recently Issued Accounting Pronouncements

There have beenno new pronouncements to date that are currently expected to be applicable, or currently expected to have a material impact to the Company’s condensed consolidated financial position and results of operations.

Accounting StandardsNot Yet Adopted**

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement –Reporting Comprehensive Income –Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses*, which requires new financial statement disclosures in tabular format, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update donot change or remove current expense disclosure requirements. The amendments in this update are effective for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027.*Early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statement disclosures.

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3. Accrued liabilities

The Company’s accrued expenses and other current liabilities are comprised of the following:

4. Convertible promissory note due to Novartis

On* January 26, 2024,the Company received a termination notice from Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis”) due to a material breach of that certain license agreement dated April 6, 2018,as amended to date (the “License Agreement”). Accordingly, under the terms of the License Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5% per annum. As of September 30, 2025*, the liability is recorded as a current liability on the Company’s condensed unaudited consolidated balance sheets as follows: $3.6 million in accounts payable, $1.4 million convertible promissory notes and accrued interest, net of debt discount, and $0.4 million in accrued liabilities.

5. Warrant liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC480, Distinguishing Liabilities from Equity and ASC815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity. For warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For warrants that donot meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Warrant liabilities are categorized within Level3 of the fair value hierarchy and are measured at fair value on a recurring basis.

The warrants issued in* April 2023,** July 2023,and September 2023 (the“2023* Warrants”) are measured at fair value at each reporting period and the reconciliation of changes in fair value during thenine months ended* September**30,* 2025 is presented in the following table:

On* September 30, 2025*, the Company used the Black-Scholes Merton model to estimate the fair value of the2023 Warrants derivative liability at approximately $0, using the following inputs:

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6. Stockholders’** Equity**

Share Repurchase Plan

On* March 3, 2025,the board of directors approved a share repurchase program, with authorization to purchase up to $5 million of the Company’s outstanding shares of common stock. For thethree* months ended* September30,* 2025, the Company repurchased 145,061 shares at a cost of $140,038. For thenine months ended* September 30, 2025,the Company purchased 2,600,763 shares for an aggregate cost of $2,705,550, inclusive of $52,015 in transaction fees. For thenine* months ended* September30,* 2025 and2024, the total proceeds used to repurchase shares were $2,705,550 and $0, respectively. As of* September**30,* 2025, there is $2,294,450 remaining for share repurchases under the share repurchase program.

Share Issuance for Services

On* July 7, 2025,the Company issued 49,505 restricted shares to a vendor in exchange for services rendered. For thenine* months ended* September 30, 2025,*the Company issued 102,873 restricted shares for services rendered.

Sale of Common Stock

On* September**22,* 2025, the Company entered into a Securities Purchase Agreement with a certain accredited investor, pursuant to which the Company agreed to sell the shares and/or prefunded warrants to the investor, in a private placement transaction. The Company agreed to issue and sell 1,562,500 shares of the Company’s common stock for $1.60 per Share, and/or prefunded warrants to purchaseone share of common stock per prefunded warrant, at an offering price of $1.60 per prefunded warrant, for gross proceeds to the Company of approximately $2.5 million, before deducting $0.05 million in legal fees and expenses.

ATM Facility

On* March 19, 2024,the Company entered into an At-The-Market Issuance Sales Agreement, as amended (the “Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”) pursuant to which, the Company mayoffer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share, having an aggregate gross sales price of up to $50 million, to or through the Ascendiant. The offer and sale of the shares will be made pursuant to a previously filed shelf registration statement on Form S-3 (FileNo.* 333-275282), originally filed with the SEC on* November 2, 2023and declared effective by the SEC on November 29, 2023,and the related prospectus supplement dated September 9, 2024and filed with the SEC on such date pursuant to Rule424*(b) under the Securities Act of1933, as amended (the “Securities Act”). On* May 2, 2024,the Company’s public float increased above$75.0* million and, as a result, the Company isnot subject to the limitations contained in General InstructionI.B.6 of Form S-3.

Under the Sales Agreement, Ascendiant* maysell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule415*(a)(4) under the Securities Act. Ascendiant will use commercially reasonable efforts to sell the shares from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company* mayimpose). The Company agreed to pay Ascendiant a commission of 3.0% of the gross proceeds from the sales of shares sold through Ascendiant under the Sales Agreement and has provided the Ascendiant with customary indemnification and contribution rights. The Company also agreed to reimburse Ascendiant for certain expenses incurred in connection with the Sales Agreement. The Company and the Ascendiant mayeach terminate the Sales Agreement at any time upon specified prior written notice. The Sales Agreement was fully utilized and terminated on March 31, 2025.*

For thethree months ended* September**30,* 2025 and2024, the amount of proceeds generated from the sale of common stock under the Sales Agreement was $0.0 and $5.4 million from the sale of 0 and 1,493,878 shares, respectively.

For thenine months ended* September**30,* 2025, the Company sold an aggregate of 9,719,173 shares of its common stock pursuant to the Sales Agreement, resulting in net proceeds of $9.7 million. For thenine months ended* September 30, 2024,*the Company sold an aggregate of $33.1 million pursuant to the Sales Agreement from the sale of 2,556,927 shares.

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Equity Incentive Plan

The Company has in effect the Allarity Therapeutics, Inc.2021 Incentive Plan (as amended, the*“2021* Incentive Plan”). Under the2021 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to employees, directors, consultants, independent contractors and advisors. The2021 Incentive Plan authorizes grants to issue up to 717,941 shares of authorized but unissued common stock and expires10 years from adoption and limits the term of each option tono more than10 years from the date of grant.

The number of shares available for grant and issuance under the2021 Incentive Plan will be increased on* January 1st of each of2022* through2031, by the lesser of (a)5% of the number of shares of all classes of the Company’s common stock issued and outstanding on each* December 31immediately prior to the date of increase or (b) such number of shares determined by the Board. In January 2025,Board approved a 5% increase to the authorized shares in the2021* Incentive Plan from 353,163 to 717,941.

Total shares available for the issuance of stock-based awards under the Company’s2021 Incentive Plan was 85,051 shares at* September**30,* 2025.

Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations as follows:

Restricted Stock Units

The following table summarizes the restricted stock unit activity during thenine months ended* September**30,* 2025:

At* September**30,* 2025, the Company had unrecognized stock-based compensation expense related to restricted stock awards of $0.41 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.3 years. The expense is recognized over the vesting period of the award.

Stock Options

The following table summarizes stock option activity during thenine months ended* September**30,* 2025:

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of* September**30,* 2025, the total compensation cost related to non-vested options awardsnot yet recognized is $11,915 with a weighted average remaining vesting period of 0.3 years.

The Company estimated the fair value of stock options granted in the period presented using a Black-Scholes option-pricing model utilizing the following assumptions:

7. License and Development Agreements

License Agreement with Novartis for Dovitinib

On* January 26, 2024,the Company received a termination notice from Novartis due to a material breach of the License Agreement. Accordingly, under the terms of the License Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5% per annum. As of September 30, 2025*, the liability is recorded as a current liability on the Company’s condensed unaudited consolidated balance sheets as follows: $3.6 million in accounts payable, $1.4 million convertible promissory notes and accrued interest, net of debt discount, and $0.4 million in accrued liabilities.

8. Loss per share of common stock

Basic loss per share is derived by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, of the potential exercise or conversion of securities, such as warrants and stock options, which would result in the issuance of incremental shares of common stock unless such effect is anti-dilutive. In calculating the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remained the same for both calculations because when a net loss exists, dilutive shares arenot included in the calculation. Potentially dilutive securities outstanding, as determined by the latest applicable conversion price, that have been excluded from diluted loss per share due to being anti-dilutive include the following:

9. Commitments and Contingencies

Indemnification

In accordance with its certificate of incorporation, bylaws, and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity.

SEC Investigation

On* July 19, 2024,the Company received a “Wells Notice” from the Staff of the SEC relating to the Company’s previously disclosed SEC investigation. The Wells Notice related to the Company’s disclosures regarding meetings with the United States Food and Drug Administration (the “FDA”) regarding the Company’s NDA for Dovitinib or Dovitinib-DRP, which was submitted to the FDA in2021.* On* March 13, 2025,the Company issued a press release announcing that the Company had reached a final settlement with the SEC relating to the Company’s previously disclosed SEC investigation, and as part of the settlement, the Company agreed to pay aone*-time civil penalty of $2.5 million. The Company made a cash payment of $2.5 million to the SEC on* April 2, 2025.*