UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Material Definitive Agreement.
On September 18, 2023, Adial Pharmaceuticals, Inc. (the “Company”) entered into a final acquisition agreement (the “FAA”) with Adovate, LLC (formerly known as Adenomed, LLC), a Virginia limited liability company (“Adovate”), to memorialize the sale effective on June 30, 2023 (the “Sale”) to Adovate of the assets and business of Purnovate, Inc. (“Purnovate”) pursuant to the Option Agreement for the Acquisition of Purnovate by Adenomed, LLC, dated as of January 27, 2023 (the “Option Agreement”), and related Option Exercise Agreement, dated May 8, 2023 (the “Option Exercise Agreement”).
The FAA memorializes the Sale as effected on June 30, 2023, pursuant to the Option Agreement and Option Exercise Agreement, provides for customary representations, warranties and indemnities by the parties, and sets the timing and final amount of the reimbursement to the Company by Adovate of the operating expenses incurred and paid by Purnovate, Inc. after December 1, 2022 (the “Reimbursable Expenses”).
The FAA provides that the Reimbursable Expenses shall be set at $1,050,000, of which $350,000 was previously paid on June 30, 2023 to the Company by Adovate, $350,000 will be paid within 48 hours following the execution of the FAA, which was paid and received on September 20, 2023, and $350,000 will be paid in increments of 25% of each equity raise by Adovate within 72 hours following the receipt of such proceeds and in full by December 2, 2023. The FAA also provides for anti-dilution protection from future Adovate equity raises in order to maintain at least 15% ownership in Adovate. The anti-dilution protection expires upon Adovate receiving $4,000,000 in cumulative funding since January 27, 2023.
The foregoing summary of the FAA does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the FAA attached as Exhibit 2.3 to this Current Report on Form 8-K, which is incorporated herein by reference. The representations, warranties and covenants contained in the FAA were made only for purposes of such agreement and as of a specific date, were solely for the benefit of the parties to the FAA and may be subject to limitations agreed upon by the contracting parties.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 18, 2023, William B. Stilley, a member of the Company’s Board of Directors (the “Board”), notified the Company of his decision to resign, effective as such date, from his position as a member of the Board and any other executive positions with the Company and its subsidiaries. The resignation was not related to any disagreement with the Company on any matter relating to its operations, policies or practices.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: September 21, 2023 | ADIAL PHARMACEUTICALS, INC. | |
| By: | /s/ Cary J. Claiborne | |
| Name: | Cary J. Claiborne | |
| Title: | President and Chief Executive Officer | |
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