Allarity Therapeutics(ALLR) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements Allarity Therapeutics' unaudited condensed consolidated financial statements detail financial position and performance as of June 30, 2025 Condensed Consolidated Balance Sheets The balance sheets as of June 30, 2025, show total assets of $21.2 million and total stockholders' equity of $12.2 million | Balance Sheet Highlights (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $17,801 | $19,533 | | Total current assets | $20,883 | $22,341 | | Total assets | $21,205 | $22,650 | | Liabilities & Equity | | | | Total current liabilities | $9,038 | $10,839 | | Total liabilities | $9,038 | $10,839 | | Total stockholders' equity | $12,167 | $11,811 | | Total liabilities and stockholders' equity | $21,205 | $22,650 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations show a net loss of $2.3 million for Q2 2025 and $5.1 million for H1 2025 | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $2,321 | $1,058 | $3,724 | $3,228 | | General and administrative | $1,812 | $2,313 | $3,445 | $4,383 | | Loss from operations | $(4,133) | $(3,371) | $(7,169) | $(7,611) | | Net loss | $(2,320) | $(1,629) | $(5,052) | $(5,472) | | Net loss per common share | $(0.15) | $(3.34) | $(0.38) | $(21.78) | Condensed Consolidated Statements of Cash Flows The cash flow statements detail $8.2 million net cash used in operations and $8.6 million provided by financing for H1 2025 | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,167) | $(8,703) | | Net cash provided by financing activities | $8,578 | $27,689 | | Effect of exchange rate changes on cash | $(2,143) | $81 | | Cash and cash equivalents, end of period | $17,801 | $19,233 | - Financing activities in the first six months of 2025 included $11.1 million in net proceeds from ATM stock sales, offset by a $2.6 million common stock repurchase[24] Notes to Condensed Consolidated Financial Statements The notes provide critical details on accounting policies, liquidity, reverse stock splits, and the SEC investigation settlement - The company believes its existing cash of $17.8 million as of June 30, 2025, is sufficient to fund operations for at least the next 12 months, despite having an accumulated deficit of $124.0 million and negative cash flows from operations of $8.2 million for the period[28] - The company effected two reverse stock splits in 2024: a 1-for-20 split on April 9 and a 1-for-30 split on September 11. All share and per-share data have been retroactively adjusted[30] - On March 3, 2025, the board approved a $5 million share repurchase program. During the three months ended June 30, 2025, the company repurchased 2,455,702 shares for approximately $2.6 million[52] - The company reached a final settlement with the SEC regarding a previously disclosed investigation and made a one-time civil penalty payment of $2.5 million on April 2, 2025[67] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and operational developments, including R&D and G&A expense changes and cash sufficiency Results of Operations Operating expenses decreased slightly for H1 2025, with R&D increasing by $0.5 million and G&A decreasing by $0.9 million | ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Research and development | $3,724 | $3,228 | $496 | | General and administrative | $3,445 | $4,383 | $(938) | | Total operating expenses | $7,169 | $7,611 | $(442) | | Net loss | $(5,052) | $(5,472) | $420 | - The increase in R&D expenses for the six months ended June 30, 2025, was driven by costs related to the expansion of the Phase II clinical trial for stenoparib in Advanced Ovarian Cancer, including increases in regulatory costs, clinical site fees, and staffing[87] - The decrease in G&A expenses for the six months ended June 30, 2025, was primarily due to a $1.2 million reduction in professional services, partially offset by a $0.3 million increase in staffing costs[89] Liquidity, Capital Resources and Plan of Operations The company had $17.8 million in cash as of June 30, 2025, and believes it has sufficient liquidity for the next 12 months - The company's cash balance was $17.8 million as of June 30, 2025, which management believes is sufficient to fund operations for at least the next 12 months[92][94] - During the six months ended June 30, 2025, the company sold 9,719,173 shares of common stock through its at-the-market (ATM) offering for net proceeds of $9.7 million. The ATM offering was terminated on March 31, 2025[94] Cash Flows Net cash used in operating activities was $8.2 million for H1 2025, with $8.6 million provided by financing activities | ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,167) | $(8,703) | | Net cash provided by financing activities | $8,578 | $27,689 | | Effect of foreign exchange rates on cash | $(2,143) | $81 | | Net increase (decrease) in cash | $(1,732) | $19,067 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Allarity Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Allarity Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk[107] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting - Management identified a material weakness in internal control over financial reporting as of June 30, 2025[108] - The material weakness is related to the accounting of the share repurchase plan that was initiated in the quarter ended June 30, 2025[109] - To remediate the weakness, management plans to update internal controls, implement new policies and procedures, and enhance review processes for contractual agreements[109][114] PART II—OTHER INFORMATION Legal Proceedings Information on material legal proceedings, including the SEC investigation settlement, is incorporated by reference from Note 9 - Information regarding material legal proceedings is incorporated by reference from Note 9, which discusses the SEC investigation and settlement[116][67] Risk Factors The company updated its risk factors to include a material weakness in internal control over financial reporting, potentially impacting financial report reliability - A new risk factor was added to reflect the identification of material weaknesses in the company's internal control over financial reporting as of June 30, 2025[117] - The material weakness could limit the company's ability to prevent or detect a material misstatement in its financial statements, potentially leading to non-compliance with SEC filing requirements and a decline in stock price[118] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchases, including the repurchase of 2,455,702 shares during Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April, 2025 | 1,857,024 | $1.07 | | May, 2025 | 99,242 | $1.12 | | June, 2025 | 499,436 | $0.94 | | Total Q2 2025 | 2,455,702 | N/A | - The board of directors approved a share repurchase program on March 3, 2025, authorizing up to $5 million in purchases. As of the end of June 2025, $2,434,489 remained available for future repurchases under the plan[122] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[125] Exhibits This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including required certifications