HOW TO VOTE

Stockholders of Record“street name” holder?

If your shares are registered directly in your name with Adial’sour transfer agent, VStock Transfer, LLC, you are considered the “stockholderstockholder of record”record with respect to those shares. The notice of those shares and this proxy statement is beingthe Special Meeting has been sent directly to you by Adial. If you are a stockholder of record, you can vote your shares in one of two ways: either by proxy or in person at the 2021 Annual Meeting. If you choose to have your shares voted by proxy, you may submit a proxy by using the internet (please visit www.proxyvote.com and follow the instructions), by telephone by calling 1-800-454-8683, or by completing and returning by mail the proxy card you have received. Whichever method you use, each valid proxy received in time will be voted at the 2021 Annual Meeting in accordance with your instructions.

Submit a Proxy by Mail

If you choose to submit a proxy by mail, simply mark, date and sign your proxy card and return it in the postage-paid envelope provided.

Submit a Proxy by Internet or Telephone

If you choose to submit a proxy by internet, go to www.proxyvote.com to complete an electronic proxy card. Have your proxy card or voting instruction card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. If you submit a proxy by telephone call 1-800-454-8683 and follow the instructions. Your internet or telephonic vote must be received by 11:59 p.m. Eastern Daylight Time on September 26, 2021 to be counted.

Submit a Proxy at the 2021 Annual Meeting

Submitting a proxy by mail, internet or telephone will not limit your right to vote at the 2021 Annual Meeting if you decide to attend in person.

Beneficial Owners of Shares Held in Street Nameus.

If your shares are held in a stock brokerage account or by a bank or other nominee, youthe nominee is considered the record holder of those shares. You are considered the “beneficial owner”beneficial owner of these shares, and your shares are held in street name, and this“street name.” A notice or proxy statement is beingand voting instruction card have been forwarded to you by your broker, bank or nominee, who is considerednominee. As the stockholder of record of those shares. As a beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instructions they included in the mailing or by following their instructions for voting by telephone or the Internet.

Q.     What is a broker non-vote?

Broker non-votes occur when shares are held indirectly through a broker, bank or nomineeother intermediary on behalf of a beneficial owner (referred to as held in “street name”) and the broker submits a proxy but does not vote for a matter because the broker has not received voting instructions from the beneficial owner and the broker does not have discretionary voting authority on the matter. Under the rules of the New York Stock Exchange (the “NYSE”) that govern how brokers may vote shares for which they have not received voting instructions from the beneficial owner, brokers are permitted to exercise discretionary voting authority only on “routine” matters when voting instructions have not been timely received from a beneficial owner. We expect that Proposals 1 and 2 are each be considered a “routine matter.” Therefore, if you do not provide voting instructions to your broker regarding Proposal 1 or Proposal 2, your broker will be permitted to exercise discretionary voting authority to vote your shares on the proposals for which you did not provide voting instructions.

Q.     If I am a beneficial owner of shares, held in your account. However, sincecan my brokerage firm vote my shares?

If you are a beneficial owner and do not vote via the Internet or telephone, by returning a signed voting instruction card to your broker, or in person at the Special Meeting, your shares may be voted only with respect to so-called “routine” matters where your broker has discretionary voting authority over your shares. We expect that under the rules of the NYSE, Proposal 1 and Proposal 2 are each considered a “routine” matter. Accordingly, brokers will have such discretionary authority to vote on such proposals in their discretion, and may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to such proposals. However, this remains subject to the final determination from the NYSE regarding which of the proposals are “routine” or “non-routine.”

ADDITIONAL INFORMATION ABOUT VOTINGthe Special Meeting.

Q:     What information is contained in this proxy statement?

A:     The information included in this proxy statement relates to the proposalsIn order to be votedcounted, proxies submitted by telephone or Internet must be received by 11:59 p.m. Eastern time on atApril 11, 2023. Proxies submitted by U.S. mail must be received before the 2021 Annual Meeting,start of the voting process, the compensation of our directors and executive officers, and other required information.Special Meeting.

Q:     How do I get electronic access to theYour proxy materials?

A:     This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2020 are available at www.adialpharma.com.

Q:     What items of business will be voted on at the 2021 Annual Meeting?

A:     The three (3) items of business scheduledaccording to be voted on at the 2021 Annual Meeting are: (1) the election of the two (2) Class III nominees named herein as directors; (2) the ratification of the appointment of Friedman as our independent registered public accounting firm for our fiscal year ending on December 31, 2021; and (3) the approval of an amendment to our 2017 Equity Incentive Plan to increase the number of shares of common stock that we will have authority to grant under the plan from 5,500,000 to 7,500,000. We will also consider any other business that properly comes before the 2021 Annual Meeting.

Q:     How does the Board of Directors recommend that I vote?

A:     The Board of Directors recommends thatyour instructions. If you vote your shares (1) FOR each of the two (2) Class III nominees named herein for election to our Board of Directors; (2) FOR the ratification of the appointment of Friedman as our independent registered public accounting firm for our fiscal year ending on December 31, 2021; and (3) FOR the approval of an amendment to our 2017 Equity Incentive Plan to increase the number of shares of common stock that we will have authority to grant under the plan from 5,500,000 to 7,500,000.

Q:     What shares can I vote?

A:     You may vote or cause to be voted all shares owned by you as of the close of business on August 5, 2021, the record date. These shares include: (1) shares held directly in your name as a stockholder of record; and (2) shares held for you, as the beneficial owner, through a broker or other nominee, such as a bank.

Q:     What is the difference between holding shares asare a stockholder of record and as a beneficial owner?

A:     Most of our stockholders hold their shares through a brokerdo not vote via the Internet or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Record Holder.    If your shares are registered directly in your name on the books of Adial maintained with Adial’s transfer agent, VStock Transfer, LLC, you are considered the “record holder” of those shares, and this proxy statement is sent directly to you by Adial. As the stockholder of record, you have the right to directly grant your voting proxy directly or to directly vote in person at the 2021 Annual Meeting.

Beneficial Owner of Shares Held in Street Name.    If your shares are held in a stock brokerage accounttelephone or by returning a bank or other nominee, you are considered the “beneficial owner” ofsigned proxy card, your shares held in street name (also called a “street name” holder), and this proxy statement is forwarded to you by your broker, bank or other nominee. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in your account. However, since you are not a stockholder of record, you may not vote these shares in person at the 2021 Annual Meeting unless you bring with you a legal proxy from the stockholder of record. A legal proxy may be obtained from your broker, bank or nominee. If you do not wish to vote in person or you will not be attendingvoted unless you attend the 2021 AnnualSpecial Meeting instruct your broker, bank or nominee to vote your shares pursuant to voting instructions you will receive from your broker, bank or nominee describing the available processes for voting your stock.

If you hold your shares through a broker and you do not give instructions to your broker on how to vote, your broker will be entitled to vote your shares in its discretion on certain matters considered routine, such asperson. If you vote via the ratification of the appointment of independent auditors. The uncontested election of directorsInternet or telephone and the approval

of the amendment to the 2017 Equity Incentive Plan are not considered routine matters. Therefore, brokers do not have the discretion to vote on those non-routine proposals. If you hold your shares in street name and you do not instruct your broker how to vote in these matters not considered routine, no votes will be cast on your behalf. These “broker non-votes ” will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum, but not as shares entitled to vote on a particular proposal.

Q:     Can I change my vote or revoke my proxy?

A:     You may change your vote or revoke your proxy at any time before the final vote at the 2021 Annual Meeting. To change your vote or revoke your proxy if you are the record holder, you may (1) notify our Corporate Secretary in writing at Adial Pharmaceuticals, Inc., 1180 Seminole Trail, Suite 495 Charlottesville, Virginia 22901; (2) submit a later-dated proxy (either by mail, telephone or internet), subject to thespecify contrary voting deadlines that are described on the proxy card or voting instruction form, as applicable; (3) deliver to our Corporate Secretary another duly executed proxy bearing a later date; or (4) by appearing at the 2021 Annual Meeting in person and voting your shares. Attendance at the meeting will not, by itself, change or revoke a proxy unless you specifically so request.

For shares you hold beneficially, you may change or revoke your vote by following instructions provided by your broker, bank or nominee.

Q:     Who can help answer my questions?

A:     If you have any questions about the 2021 Annual Meeting or how to vote or revoke your proxy, or you need additional copies of this proxy statement or voting materials, you should contact the Corporate Secretary, Adial Pharmaceuticals, Inc., at 1180 Seminole Trail, Suite 495 Charlottesville, Virginia 22901 or by phone at (434) 422-9800.

Q:     How are votes counted?

A:     In the election of directors, you may vote FOR either or both of the two (2) nominees for Class III directors named herein or you may direct your vote to be WITHHELD with respect to either or both of the nominees.

With respect to the other two (2) proposals, you may vote FOR, AGAINST, or ABSTAIN. On these proposals, if you ABSTAIN, it has the same effect as a vote AGAINST.

If you provide specific instructions, your shares will be voted as you instruct. If you are a record holder and submit your proxy card with no further instructions, your shares will be voted in accordance with the recommendations of the Board of Directors, namely (1) FOR the two (2) nominees for Class III directors for election to our Board of Directors; (2) FOR the ratification of the appointment of Friedman our independent registered public accounting firm for the year ending December 31, 2021;on all matters. Similarly, if you sign and (3) FOR the approval of an amendment to our 2017 Equity Incentive Plan to increase the number of shares of common stock that we will have authority to grant under the plan from 5,500,000 to 7,500,000. If any other matters properly arise at the meeting,submit your proxy togethercard with the other proxies received,no instructions, your shares will be voted in accordance with the recommendations of our Board on all matters. No other business will be considered at the discretion of the proxy holders. If you are a beneficial owner please follow the instructions provided to you by your broker, bank or other nominee.Special Meeting.

Q:     What is a quorum and why is it necessary?

A:     Conducting business at the meeting requires a quorum. The presence, either in person or by proxy, of the holders of a majority of our shares of common stock outstanding and entitled to vote on August 5, 2021 are necessary to constitute a quorum. Abstentions are treated as present for purposes of determining whether a quorum exists. Your shares will be counted towards the quorum only if you submit a valid proxy (or in the case of a beneficial owner, one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the 2021 Annual Meeting. Broker non-votes (which result when your shares are held in “street name” and you do not tell the nominee how to vote your shares on a matter for which the broker does not have discretionary authority to vote the shares) are treated as present for purposes of determining whether a quorum is present at the meeting. If there is no quorum, the chairperson of the meeting or the holders of a majority of the shares represented at the meeting may adjourn the meeting to another date.

Q:     What is the voting requirement to approve each of the proposals?

A:     For Proposal 1 (the election of directors), the two (2) persons named herein receiving the highest number of FOR votes (from the holders of votes of shares present in person or represented by proxy at the 2021 Annual Meeting and entitled to vote on the election of directors) will be elected. Only votes FOR will affect the outcome as long as each nominee receives at least one FOR vote. Abstentions, withheld and broker non-votes will have no effect on the outcome of the vote as long as each nominee receives at least one FOR vote. You do not have the right to cumulate your votes.

To be approved, Proposal 2, which relates to the ratification of the appointment of Friedman, as our independent registered public accounting firm for the year ending December 31, 2021, must receive FOR votes from the holders of a majority of the shares present in person or represented by proxy and entitled to vote on that proposal at the 2021 Annual Meeting. Abstentions will have the same effect as an AGAINST vote. Since this is a routine matter for which brokers have discretion to vote if beneficial owners do not provide voting instructions, there are not expected to be any broker non-votes on this proposal. This vote is advisory, and therefore is not binding on us, the Audit Committee or the Board of Directors. If our stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.

To be approved, Proposal 3, which relates to the approval of an increase in the number of shares of common stock that may be granted under our 2017 Equity Incentive Plan, must receive FOR votes from the holders of a majority of the shares present in person or represented by proxy and entitled to vote on that proposal at the 2021 Annual Meeting. Abstentions will have the same effect as an AGAINST vote. Broker-non-votes are not votes present and not entitled to vote at the 2021 Annual Meeting, and therefore will have no effect on the outcome of this proposal.

If your shares are held in “street name”name,” meaning they are held for your account by an intermediary, such as a bank, broker or other nominee, then you are deemed to be the beneficial owner of your shares and the broker that actually holds the shares for you do not indicate how you wishis the record holder and is required to vote the shares it holds on your behalf according to your instructions. The proxy materials, as well as voting and revocation instructions, should have been forwarded to you by the bank, broker is permitted to exercise its discretionor other nominee that holds your shares. In order to vote your shares, you will need to follow the instructions that your bank, broker or other nominee provides you. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on certain “routine” matters. The only routine matterthe voting processes of the bank, broker or other nominee that holds your shares. Therefore, we urge you to be submitted to our stockholders atcarefully review and follow the 2021 Annual Meeting is Proposal 2. None of ourvoting instruction card and any other proposals are routine matters. Accordingly, ifmaterials that you receive from that organization.

In the event you do not direct your brokerprovide instructions on how to vote, forwe expect that your broker will have authority to vote your shares with respect to the Reverse Stock Split Proposal and the Adjournment Proposal. Under the rules that govern brokers who are voting with respect to shares that are held in street name, brokers have the discretion to vote such shares on “routine” matters, but not on “non-routine” matters. We expect that each of the Reverse Stock Split Proposal and the Adjournment Proposal is considered a director in“routine” matter. Accordingly, your broker, bank or other nominee may vote your shares if it does not receive instructions from you on Proposal 1 (Reverse Stock Split Proposal) and Proposal 2 (Adjournment Proposal). A failure to instruct your broker, bank or other nominee on how to vote for Proposal 3, your broker may not exercise discretion and may not vote your shares on that proposal.will not necessarily count as a vote against Proposal 1 (Reverse Stock Split Proposal) and Proposal 2 (Adjournment Proposal).

for a vote at the meeting. If for any unforeseen reason any of our nominees are not available as a candidate for director, the persons named as proxy holders will vote your proxy for any one or more other candidates nominated by the Board of Directors.

Q:     How many shares are outstanding and how many votes is each share entitled?

A:     Each share of our common stock that is issued and outstanding as of the close of business on August 5, 2021, the record date, is entitled to be voted on all items being voted on at the 2021 Annual Meeting, with each share being entitled to one vote on each matter. As of the record date, August 5, 2021, 20,298,156 shares of common stock were issued and outstanding.

Q:     Who will count the votes?

A:     One or more inspectors of election will tabulate the votes.

Q:     Is my vote confidential?

A:     Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either within Adial or to anyone else, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the tabulation of votes and certification of the vote; or (3) to facilitate a successful proxy solicitation.

Q:     Who will bearwho pays the cost of soliciting votesthis proxy solicitation?

Our Board is asking for the 2021 Annual Meeting?

A:     The Board of Directors is making this solicitation on behalf of Adial, whichyour proxy and we will pay all of the entire costcosts of preparing, assembling, printing, mailing, and distributing these proxy materials. Certain of our directors, officers, and employees, without any additional compensation, may also solicit your vote in person, by telephone, or by electronic communication. On request, weasking for stockholder proxies. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxysolicitation material to the beneficial owners of Common Stock and solicitation materialscollecting voting instructions. We may use officers and employees of the Company to stockholders.ask for proxies, as described below.

Is this Proxy Statement the only way that proxies are being solicited?

No. In addition to the usesolicitation of proxies, we have engaged D.F. King & Co., Inc., the proxy solicitation firm hired by the Company, at an approximate cost of $10,000, plus reimbursement of expenses, to solicit proxies on behalf of our Board. D.F. King & Co., Inc. may solicit the return of proxies, either by mail, telephone, telecopy, e-mail or through personal contact. The fees of D.F. King & Co., Inc. as well as the reimbursement of expenses of D.F. King & Co., Inc. will be borne by us. Our officers, directors and employees may also solicit the return of proxies, may be solicitedeither by mail, telephone, telecopy, e-mail or through personal interview, telephone, telegram, facsimile and advertisement in periodicals and postings, in each case by our directors,contact. These officers and employees withoutwill not receive additional compensation.

compensation for their efforts but will be reimbursed for outQ:     -of-pocketWhen are stockholder proposals expenses. Brokerage houses and director nominations due for next year’s Annual Meeting?

A:     To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by April 25, 2022, to the attention of the Corporate Secretary of Adial Pharmaceuticals, Inc. at 1180 Seminole Trail, Suite 495 Charlottesville, Virginia 22901other custodians, nominees and you must comply with all applicable requirements of Rule 14a-8 (“Rule 14a-8”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Stockholders of record may also submit a proposal (including a director nomination) in accordance with Adial’s amended and restated bylaws (the “Bylaws”), which contain additional requirements about advance notice of stockholder proposals and director nominations. Generally, timely notice of any director nomination or other proposal that any stockholder intends to present at the 2022 Annual Meeting, but does not intend to have included in the proxy materials prepared by the Companyfiduciaries, in connection with shares of the 2022 Annual Meeting, mustCommon Stock registered in their names, will be delivered in writingrequested to forward solicitation material to the Corporate Secretarybeneficial owners of shares of Common Stock.

Are there any other matters to be acted upon at the address above no later thanSpecial Meeting?

The only matters to be acted upon at the 90Special Meeting are the Reverse Stock Split Proposal and the Adjournment Proposal. No other matters will be acted upon at the Special Meeting.

thWhere can I find the voting results of the Special Meeting?

The preliminary voting results will be announced at the Special Meeting. The final results will be published in a Current Report on Form 8-K day nor earlier thanto be filed by us with the 120SEC within four business days of the meeting.

thWhom do I call if I have questions?

If you have any questions, need additional material, or need assistance in voting your shares, please feel free to contact the firm assisting us in the solicitation of proxies, D.F. King & Co., Inc., at (800) 967-0261.

PROPOSAL 1second compliance period.

ELECTION OF DIRECTORS

Our Board of Directors currently consists of six (6) directors and pursuant to the terms of our certificate of incorporation, our Board of Directors is divided into three classes, designated Class I, Class II and Class III. Each class will consist, as nearly as may be possible, of one third of the total number of directors constituting the entire Board of Directors. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. The six (6) members of our Board of Directors are: William B. Stilley, Kevin Schuyler (Lead Independent Director), J. Kermit Anderson, Robertson H. Gilliland, Tony Goodman, and James W. Newman. Our Board of Directors is currently divided into three classes as follows:

•        Class I, which consists of William B. Stilley, III and Kevin Schuyler, will stand for election at the 2022 Annual Meeting;

•        Class II, which consists of Tony Goodman and Robertson H. Gilliland, will stand for election at the 2023 Annual Meeting of Stockholders; and

•        Class III, which consists of J. Kermit Anderson and James W. Newman, Jr., will stand for election at the 2021 Annual Meeting of Stockholders.

Our Board of Directors proposed that each of the two (2) Class III nominees named below, each of whom is currently serving as a director in Class III, be elected as a Class III director for a three-year term expiring at the 2024 annual meeting of stockholders and until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification, or removal.

Messrs. Anderson and Newman have been nominated by our Nominating and Corporate Governance Committee and Board of Directors for the election as directors. The Board of Directors believes that it is in the best interests of our company to elect the above-described Class III director nominees, each to serve as a director until the 2024 annual meeting of stockholders and until his successor shall have been duly elected and qualified. The Board believes that eachthe failure of stockholders to approve the Reverse Stock Split Proposal could prevent us from maintaining compliance with the Minimum Bid Price Requirement and could inhibit our ability to conduct capital raising activities, among other things. If Nasdaq delists the Common Stock, then the Common Stock would likely become traded on an over-the-counter market such as those maintained by OTC Markets Group Inc., which do not have the substantial corporate governance or quantitative listing requirements for continued trading that Nasdaq has. In that event, interest in Common Stock may decline and certain institutions may not have the ability to trade in the Common Stock, all of which could have a material adverse effect on the liquidity or trading volume of the nominees is highly qualifiedCommon Stock. If the Common Stock becomes significantly less liquid due to serve as a member of the Board of Directors and each has contributed to the mix of skills, core competencies and qualifications of the Board of Directors. When evaluating candidates for election to the Board of Directors, the Nominating and Corporate Governance Committee seeks candidates with certain qualities that it believes are important, including diversity of experience, skills, expertise, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest, those criteria and qualifications described in each director’s biography below and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board of Directors.

Shares represented by proxies will be voted “FOR” the election of the two (2) nominees (Messrs. Anderson and Newman), unless the proxy is marked to withhold authority to so vote. All of the nominees have consented to being named in this proxy statement and to serve as a director if elected. At the time of the 2021 Annual Meeting, if any of the nominees named below is not available to serve as director (an event that the Board of Directors does not currently have any reason to anticipate), all proxies may be voted for any one or more other persons that the remaining directors of the Board of Directors designate in their place and it is the intention of the persons named as proxies to vote all shares of common stock for which they have been granted a proxy for the election of each of such replacement nominees. Each nominee has consented to being named in this proxy statement and to serve if elected. Proxiesdelisting from Nasdaq, our stockholders may not be voted for more than two directors. Stockholders may not cumulate votes forhave the election of directors.

THE NOMINEES

Set forth below are our two (2) director nominees,ability to liquidate their respective ages and positions as of the date of this proxy statement, the year in which each first became a director and the year in which their terms as director expire assuming they are re-elected at the 2021 Annual Meeting:

Class III Directors

J. Kermit Anderson, Director

J. Kermit Anderson has served as a director since February 2015. He has served as the VP and Chief Financial Officer at Cumberland Development Co. since 2007. Cumberland is a privately held company which evaluates and oversees investments in minerals exploration, life sciences, and real estate for a family office. Mr. Anderson has over forty years of experience in financial and development roles for a number of companies. He holds widely diversified experience in financial planning and reporting, accounting, forecasting, pricing, GAAP reporting and contract negotiations including benefits and compensation. His career is split almost equally between public and private companies including major sales and acquisitions. He has held various positions in energy businesses including Massey Energy, AMVEST and Cumberland Resources Corporation working on the sale of the companies for the last two roles. Mr. Anderson has worked extensively on startups for Massey and AMVEST including the move to a new business area with AMVEST. He received his BS-BA from West Virginia University in 1972.

We selected Mr. Anderson to serve on our board of directors because he brings extensive industry experience in corporate development and finance. His prior service with other public companies provides experience related to good corporate governance practices.

James W. Newman, Jr., Director

James W. Newman, Jr. has served as a director since September 2014. Since April 2013, he served as the Founder, Chairman, and President of Medical Predictive Science Corporation (“MPSC”), a medical device company that translates ICU research discoveries to the patient’s bedside and develops predictive technology that detects imminent, catastrophic illness. MPSC’s HeRO sold in over 20 countries and is a pioneering monitoring system for premature infants which detects early signs of distress commonly caused by infection and other potentially life-threatening illnesses. He has also served as part of the management team of Newman Company, a real estate company, since 1980, for which he still works and is the sole owner. In the mid-1990s he began making capital investments in several “start-up” companies, including Charlottesville-based Medical Automation Systems, a major provider of information management systems for point-of-care testing, which was acquired by Massachusetts-based Alere Inc. in 2011. His investments have covered a wide range of fields, encompassing everything from biotechnology, bio-informatics, education, and telecommunications, as well as mechanical inventions. He is particularly interested in investments in the medical field that improve healthcare, but do so at a reduced costCommon Stock as and when desired and we believe our ability to consumers. Mr. Newman received a B.A. degree from Upsala College in 1968.

We selected Mr. Newmanmaintain analyst coverage, attractive investor interest, and have access to serve on our board of directors because he brings a strong business background to our company and adds significant strategic, business and financial experience. Mr. Newman’s business and finance background provides him with a broad understanding of the issues faced by companies similar to us.

Vote Required

Provided that a quorum is present, the nominees for director receiving a plurality of the votes cast at the 2021 Annual Meeting in person or by proxy will be elected. Abstentions, withheld votes and broker non-votes will not affect the outcome of the election.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE YOUR SHARES FOR THE ELECTION OF EACH OF THESE NOMINEES

CONTINUING DIRECTORS

The directors who are serving terms that end following the 2021 Annual Meeting and their ages, positions at our company, the year in which each first became a director and the expiration of their respective terms on our Board of Directors are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

Class I Directors

William B. Stilley, III, Chief Executive Officer, President and Director

William B. Stilley has served as our Chief Executive Officer since December 2010, our Secretary and Treasurer from April 2012 until October 2017 and a director since April 2011. In July 2018, Mr. Stilley was appointed to servecapital may become significantly diminished as a member of the board of directors of Avalon GloboCare Corp. (Nasdaq: AVCO), where he also serves as Chairman of the audit committee. Avalon GloboCare Corp. is a global intelligent biotech developer and healthcare service provider dedicated to promoting and empowering high impact, transformative cell-based technologies and their clinical applications, as well as healthcare facility management. Prior to joining the Company from August 2008 until December 2010, Mr. Stilley was the Vice President, Business Development & Strategic Projects at Clinical Data, Inc. (Nasdaq: CLDA). At Clinical Data, Inc., Mr. Stilley worked on licensing and M&A transactions and was involved in management of Phase 3 clinical trials, production of Viibryd® for initial commercial launch of the product, and sourcing drug product and drug substance for the Phase 3 clinical trials of the company’s vasodilator drug for myocardial stress imaging. From February 2002, Mr. Stilley was the COO and CFO of Adenosine Therapeutics, LLC where he ran the internal operations of the company, including research and development, and all financing activity, until the sale of its principal assets were acquired by Clinical Data, Inc. in August 2008. Deals closed include, without limitation, financings, licenses or acquisition agreements with Johnson & Johnson, Novartis, Santen Pharmaceuticals, Epix Pharmaceuticals, CombinatoRx, ATEL Ventures, Medical Predictive Sciences Corporation, and Novartis Ventures. Mr. Stilley has advised both public and private companies on financing and M&A transactions, has been the interim CFO of a public company, the interim Chief Business Officer of Diffusion, and the COO and CFO of a number of private companies. Before entering the business community, Mr. Stilley served as Captain in the U.S. Marine Corps.

Mr. Stilley has an MBA with honors from the Darden School of Business and a B.S. in Commerce/Marketing from the McIntire School of Commerce at the University of Virginia. He has guest lectured at the Darden School of Business in two courses on the management of life science companies and, until recently, served on the board of directors of Virginia BIO, the statewide biotechnology organization.

We selected Mr. Stilley to serve on our board of directors because he brings to the board extensive knowledge of the biotechnology industry. Having served in senior corporate positions in several biomedical companies, he has a vast knowledge of the industry and brings to the board significant executive leadership and operational experience as well as knowledge and experience of financing and M&A transactions. His business experience provides him with a broad understanding of the operational, financial and strategic issues facing public companies and his extensive knowledge financing and M&A will serve our company well in the future.

Kevin Schuyler, CFA — Director, Vice Chairman of the Board of Directors, Lead Independent Director

Kevin Schuyler has served as a director since April 2016 and is our Vice Chairman of the board of directors and Lead Independent Director. He currently serves as a senior managing director at CornerStone Partners, a full-service institutional CIO and investment office located in Charlottesville, VA, with approximately $10 billion under

management. Prior to joining CornerStone Partners in 2006, he held various positions with McKinsey & Company, Louis Dreyfus Corporation and The Nature Conservancy. Mr. Schuyler serves on various boards and committees of Sentara Martha Jefferson Hospital, the US Endowment for Forestry and Communities, and Stone Barns Center. He is a member of the investment committee of the Margaret A. Cargill Philanthropies. Mr. Schuyler graduated with honors from Harvard College and received his MBA from The Darden Graduate School of Business at the University of Virginia. He is a member of the Chartered Financial Analyst Society of Washington, DC.

We selected Mr. Schuyler to serve on our board of directors because he brings extensive knowledge of the financial markets. Mr. Schuyler’s business background provides him with a broad understanding of the financial markets and the financing opportunities available to us.

Class II Directors

Robertson H. Gilliland, MBA, Director

Mr. Gilliland has served as a director since September 2014. Since May 2020, Mr. Gilliland has served as an independent consultant to family offices, with specific focus on investment strategy formulation and governance. From July 2013 until April 2020, he was Principal and Chief Financial Officer at Keller Enterprises, LLC, a family office that invests and manages private capital. In addition to his duties as CFO, as a principal, Mr. Gilliland sourced, vetted and managed a variety of private direct investments and spearheaded internal strategic initiatives. Prior to joining Keller Enterprises, Mr. Gilliland attended business school beginning in 2011 and was previously a Director at the Brunswick Group, where he specialized in strategic communications and investor relations around mergers and acquisitions, including being an advisor on the Pfizer-Wyeth, Celgene-Pharmion, and Mylan-Merck KGaA Generic transactions. During his tenure at Brunswick, Mr. Gilliland worked on over 35 multi-billion dollar M&A transactions. He has his MBA from the University of Michigan’s Ross School of Business, where he graduated with honors.

We selected Mr. Gilliland to serve on our board of directors because he brings extensive knowledge of the financial markets. Mr. Gilliland’s business background provides him with a broad understanding of the financial markets and the financing opportunities available to us.

Tony Goodman, Director

Tony Goodman has served as a director since July 2017. Mr. Goodman’s career spans over 23 years in Pharma and Biotech. Mr. Goodman is the Founder/Managing Director of Keswick Group, LLC, a Biotech Strategic Commercial and Business Development Advisory Firm. From October 2014 until February 2017, he served as the Chief Business Development Officer of Indivior PLC (INDV, FTSE 500) and a member of the executive team which brought Indivior public as a demerger from Reckitt Benckiser Pharmaceuticals, Inc. Mr. Goodman held many leadership positions at Reckitt Benckiser Pharmaceuticals from October 2009 until October 2014 that include: Global Director, Strategy and Commercial Development; Global Head, Category Development; and Director of US Commercial Managed Care. Mr. Goodman has also served as the Director of Strategic Marketing and Business Development at PRA International and Group Product Manager, Marketing and Director of the Managed Health Strategies Group at Purdue Pharmaceuticals L.P. Mr. Goodman graduated from Marshall University, with a degree in Business Administration and is currently a Full Board Executive with the National Association of Corporate Directors (“NACD”).

We selected Mr. Goodman to serve on our board of directors because he brings extensive knowledge of the addiction and pharmaceuticals industry and his significant strategic development experience. Mr. Goodman’s position at the NACD provides him with a broad understanding of the role of directors and corporate governance issues facing public companies.

DIRECTOR INDEPENDENCE

Our common stock is listed on the Nasdaq Capital Market (“Nasdaq”). Under the Nasdaq listing standards, independent directors must comprise a majority of a listed company’s Board of Directors and all members of our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committees must be independent. Audit Committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act and Compensation Committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under the Nasdaq listing standards, a director will only qualify as an “independent director” if, in the opinion of that company’s Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our Board of Directors undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board of Directors has determined that J. Kermit Anderson, Robertson H. Gilliland, Tony Goodman, James W. Newman, Jr., and Kevin Schuyler, representing five of our six directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing standards of Nasdaq. In making such determination regarding independence, our Board of Directors considered the relationship that each such non-employee director has with our company and all other facts and circumstances that our Board of Directors deemed relevant in determining his independence, including the beneficial ownership of our capital stock by each non-employee director. Mr. Stilley is the only director who is not “independent” as defined under the listing standards of Nasdaq. Mr. Stilley is not an independent director under these rules because he is our Chief Executive Officer and President.

We currently have: (1) an Audit Committee comprised of Kevin Schuyler, James Newman and Tony Goodman, each of whom are deemed to be independent in accordance with the Nasdaq definition of independence, satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, and each has the related financial management expertise within the meaning of the Nasdaq rules; (2) a Compensation Committee comprised of James Newman and J. Kermit Anderson, each of whom is deemed to be independent in accordance with the Nasdaq definition of independence and satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act; and (3) a Nominating and Corporate Governance Committee comprised of Tony Goodman and Robertson H. Gilliland, each of whom is deemed to be independent in accordance with the Nasdaq definition of independence.

The Board of Directors annually determines the independence of directors based on a review by the directors and the Nominating and Corporate Governance Committee. No director is considered independent unless the Board of Directors has determined that he or she has no material relationship with us.

Family Relationships

There are no family relationships among any of our directors or executive officers.

INFORMATION REGARDING THE COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. The following table shows the directors who are currently members or Chairman of each of these committees.

Audit Committee

Our common stock is listed on the Nasdaq. Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s Board of Directors and all members of our audit, compensation and nominating and corporate governance committees must be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. Under the rules of the Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (2) be an affiliated person of the listed company or any of its subsidiaries.

The members of our Audit Committee are Messrs. Schuyler, Newman and Goodman, each of whom has been determined by our Board of Directors to be independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules and regulations. Mr. Schuyler is the chairman of the Audit Committee. Our Audit Committee’s responsibilities include, among others:

•        approving the retention and replacement of, the compensation of, and assessing the independence of, our registered public accounting firm;

•        overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from that firm;

•        reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

•        monitoring our internal control over financial reporting, disclosure controls and procedures;

•        reviewing and approving our internal audit function;

•        discussing our financial risk management policies;

•        establishing policies regarding procedures for the receipt and retention of accounting related complaints and concerns;

•        meeting independently with our internal auditing staff, if any, our independent registered public accounting firm and management;

•        reviewing and approving any related party transactions; and

•        preparing the Audit Committee report required by SEC rules.

All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our Audit Committee.

Our Board of Directors has determined that Mr. Schuyler is an “audit committee financial expert” as defined in applicable SEC rules.

The Audit Committee operates pursuant to a written charter adopted by the Board of Directors, which is available on the Company’s website at www.adialpharma.com. The charter describes the nature and scope of responsibilities of the Audit Committee.

Compensation Committee

The members of our Compensation Committee are Messrs. Anderson and Newman, each of whom has been determined by our Board of Directors to be independent under current Nasdaq rules and regulations. Mr. Anderson is the chairman of the Compensation Committee. Compensation Committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act.

Our Compensation Committee’s responsibilities include, among others:

•        establishing annually the corporate goals and objectives applicable to the compensation of the Chief Executive Officer, evaluating at least annually the Chief Executive Officer’s performance in light of those goals and objectives, and determining and approving the Chief Executive Officer’s compensation level based on this evaluation;

•        reviewing and approving the compensation of all named executive officers;

•        overseeing the administration of our equity incentive plans, including making determinations regarding granting of options and other awards under the plans;

•        reviewing and approving the executive compensation information included in our Annual Report on Form 10-K and Proxy Statement;

•        reviewing and approving or providing recommendations with respect to any named executive officer employment agreements or severance arrangements or plans; and

•        establishing director compensation and recommending any changes to the Board of Directors.

The Compensation Committee oversees the administration of our equity incentive plans, including review and determining of long-term incentive compensation for each executive, director and employee, including grants of stock options. The Compensation Committee believes that this long-term incentive compensation aligns the interests of our executives with those of our stockholders and furthers executive retention.

The Compensation Committee also reviews and recommends to the Board of Directors appropriate director compensation programs for service as directors, committee chairs and committee members.

The Compensation Committee operates under a formal charter that governs its duties and standards of performance. A copy of the charter is available on our website at www.adialpharma.com.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Messrs. Gilliland and Goodman, each of whom has been determined by our Board of Directors to be independent under current Nasdaq rules. Mr. Gilliland is the chairman of the Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee’s responsibilities include, among others:

•        consider and recommend to the Board of Directors individuals for appointment or election as directors;

•        identifying and recommending candidates to fill vacancies on the committees of the Board of Directors;

•        making recommendations to the Board of Directors regarding any changes to the Board of Directors or any committee of the Board of Directors;

•        developing, subject to the Board of Directors’ approval, a process for an annual evaluation of the Board of Directors and its committees and to oversee the conduct of this annual evaluation; and

•        overseeing our risk governance structure and practices, and policies for risk assessment and risk management.

Candidates for director should have certain minimum qualifications, including the ability to understand basic financial statements, being over 21 years of age, having relevant business experience (taking into account the business experience of the other directors), and having high moral character. The Nominating and Corporate Governance Committee retains the right to modify these minimum qualifications from time to time.

In evaluating an incumbent director whose term of office is set to expire, the Nominating and Corporate Governance Committee reviews such director’s overall service to our company during such director’s term, including the number of meetings attended, level of participation, quality of performance, and any transactions with our company engaged in by such director during his term.

When selecting a new director nominee, the Nominating and Corporate Governance Committee first determines whether the nominee must be independent for Nasdaq purposes or whether the candidate must qualify as an “audit committee financial expert.” This committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm to assist in the identification of qualified director candidates. The Nominating and Corporate Governance Committee also will consider nominees recommended by our stockholders. The Nominating and Corporate Governance Committee does not distinguish between nominees recommended by our stockholders and those recommended by other parties. This committee evaluates the suitability of potential nominees, taking into account the current board composition, including expertise, diversity and the balance of inside and independent directors. The Nominating and Corporate Governance Committee endeavors to establish a diversity of background and experience in a number of areas of core competency, including business judgment, management, accounting, finance, knowledge of our industry, strategic vision, research and development and other areas relevant to our business.

In considering any person recommended by one of our stockholders, the Nominating and Corporate Governance Committee will look for the same qualifications that it looks for in any other person that it is considering for a position on the Board of Directors. The Nominating and Corporate Governance Committee operates under a formal charter that governs its duties and standards of performance. A copy of the charter is available on our website at www.adialpharma.com.

CORPORATE GOVERNANCE

Board of Directors Leadership Structure

Upon completion of our initial public offering, our largest stockholder, Dr. Bankole Johnson, also served as the Chairman of our Board of Directors. However, Dr. Johnson resigned as Chairman in March 2019 in order to become our Chief Medical Officer. As a result, we do not currently have a Chairman of our Board of Directors; however, Kevin Schuyler is our Vice Chairman of our Board of Directors. Furthermore, we do not have a formal policy on whether the same person should (or should not) serve as both the Chief Executive Officer and Chairman of the Board of Directors. Due to the size of our company, it may very well be appropriate to have the same person serves as Chairman of the Board and Chief Executive Officer of our company.result.

In addition, we currently have a separate lead independent director. Our lead independent director is Kevin Schuyler. In that role, Mr. Schuyler presides overlimited number of authorized shares issuable under our current Charter. Amendment of our Certificate of Incorporation to effect the executive sessionsReverse Stock Split will increase the number of shares available for future issuance, facilitating future fundraising activities if necessary. A failure to approve the Reverse Stock Split Proposal may limit our ability to raise capital through the sale of Common Stock.

Board and Committee Meetings and Attendance

During our fiscal year ended December 31, 2020, our Board of Directors held eight meetings. During our fiscal year ended December 31, 2020, our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee met seven times, five times, and one time, respectively. Each of our incumbent directors that were directors during our fiscal year ended December 31, 2020 attended no less than 75% of the meetings of the Board of Directors and Board committees on which such director served during 2020.

Board Attendance at Annual Stockholders’ Meeting

Our directorsReverse Stock Split, you are encouraged, but not required, to attend the 2021 Annual Meeting. Due to COVID-19 concerns, one or more of our directors may not attend the 2021 Annual Meeting in person. Six of our directors who were directors at the time of our 2020 Annual Meeting of Stockholders attended our 2020 Annual Meeting of Stockholders.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10 percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such officers, directors and persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file with the SEC.

Based solely on a review of the copies of such forms that were received by us, or written representations from certain reporting persons that no Forms 5 were required for those persons, we are not aware of any failures to file reports or report transactions in a timely manner during the year ended December 31, 2020.

Anti-Hedging/Anti-Pledging Policy

We have adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions. Consequently, no employee, executive officer or director may enter into a hedge or pledge of our common stock, including short sales, derivatives, put options, swaps and collars.

Stockholder Communication with Directors

The Board of Directors has established a process to receive communications from stockholders. Stockholders and interested parties who wish to communicate with our Board of Directors, non-management members of our Board of Directors as a group, a committee of our Board of Directors or a specific member of our Board of Directors (including our chairperson or lead independent director, if any) may do so by letters addressed to the attention of our Corporate Secretary.

All communications are reviewed by the Corporate Secretary and provided to the members of our Board of Directors as appropriate. Unsolicited items, sales materials, those deemed to be frivolous or otherwise inappropriate materials and other routine items and items unrelated to the duties and responsibilities of our Board of Directors will not be provided to directors.

The address for these communications is:

Adial Pharmaceuticals, Inc.
c/o Corporate Secretary
1180 Seminole Trail, Suite 495
Charlottesville, Virginia 22901

DIRECTOR COMPENSATION

2020 Director Compensation Table

The following table sets forth information regarding the compensation earned for service on our board of directors by our non-employee directors during the year ended December 31, 2020. Mr. Stilley also served on our board of directors, and received compensation as a result. The compensation for Mr. Stilley as an executive officer and Director is set forth under “— Summary Compensation Table.”

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(1)      As of December 31, 2020, the following are the total outstanding number of option awards held by each of our non-employee directors, all awards having been made prior to January 1, 2021:

(2)      Mr. Reich joined the Board of Directors on May 19, 2020 and leftexpressly authorizing the Board to determine not to proceed with, and to defer or to abandon, the Reverse Stock Split, in the Board’s sole discretion. In determining whether to implement the Reverse Stock Split following receipt of stockholder approval of the Reverse Stock Split, and which Reverse Stock Split Ratio to implement, if any, the Board may consider, among other things, various factors, such as:

•        our ability to maintain our listing on Nasdaq;

•        the historical trading price and trading volume of the Common Stock;

•        the then-prevailing trading price and trading volume of the Common Stock and the expected impact of the reverse stock split on the trading market for the Common Stock in the short and long term;

•        which Reverse Stock Split Ratio would result in the greatest overall reduction in our administrative costs; and

•        prevailing general market and economic conditions.

Potential Reasons for the Reverse Stock Split

To increase the per share price of our Common stock and to maintain our Nasdaq Listing.    As discussed above, the primary objective for effecting the Reverse Stock Split, should our Board choose to effect one, would be to increase the per share price of our Common Stock and regain compliance with the Nasdaq Minimum Bid Price. Our Board believes that, should the appropriate circumstances arise, effecting the Reverse Stock Split, could, among other things, help us to appeal to a broader range of investors, generate greater investor interest in the Company, and improve the perception of our Common Stock as an investment security. Our Common Stock is listed on Nasdaq and the continuing failure to comply with the Minimum Bid Price Requirement may be cured, if the closing share price is at least $1.00 per share, and the price remains at or above the level for at least the following 10 business days prior to expiration of any Nasdaq grace period. Our request included a written notice to the Staff of our intention to cure the deficiency during this grace period by effecting a reverse stock split, if necessary. The Board believes that the Reverse Stock Split may potentially assist us in achieving compliance with the Minimum Bid Price Requirement. We currently believe that we are in compliance with all other applicable continued listing requirements of Nasdaq.

To potentially improve the liquidity of the Common Stock.    A Reverse Stock Split could allow a broader range of institutions to invest in the Common Stock (namely, funds that are prohibited from buying stocks whose price is below certain thresholds), potentially increasing trading volume and liquidity of the Common Stock and potentially decreasing the volatility of the Common Stock if institutions become VP, Regulatorylong-term holders of the Common Stock. A Reverse Stock Split could help increase analyst and broker interest in the Common Stock as their policies can discourage them from following or recommending companies with low stock prices. Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on December 14, 2020.

Directors receive cash compensation forlow-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, a low average price per share of Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their service as directors, including service as memberstotal share value than would be the case if the share price were higher. Some investors, however, may view a Reverse Stock Split negatively since it reduces the number of each committee on which they serve.

Does not include options to purchase 40,000 shares of our common stock issued to each non-executive director on February 10, 2021. The options vest pro rata on a monthly basis over 36 months.

On June 30, 2017,Common Stock available in the board of directorspublic market. If the Reverse Stock Split Amendment is approved a plan for the annual cash compensation of directors, which plan was amended on April 1, 2018 with respect to the Chairman’s compensation, which plan remained in effect in 2020:

On February 12, 2021, the Compensation Committee approved a plan for the annual cash compensation of directors for 2021:

PROPOSAL 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee ofand the Board of Directors has selected Friedman, LLP (“Friedman”), an independent registered accounting firm, to auditbelieves that effecting the books and financial records of the Company for the year ending December 31, 2021. AdialReverse Split is asking its stockholders to ratify the appointment of Friedman, Adial’s independent registered public accounting firm, for fiscal 2021.

A representative of Friedman is expected to be present either in person or via teleconference at the 2021 Annual Meeting and available to respond to appropriate questions, and will have the opportunity to make a statement if he or she desires to do so.

Ratification of the appointment of Friedman by our stockholders is not required by law, our bylaws or other governing documents. As a matter of policy, however, the appointment is being submitted to our stockholders for ratification at the 2021 Annual Meeting. If our stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in our best interest and the best interestsinterest of our stockholders.

Vote Required

The affirmative votestockholders, the Board may effect this Reverse Stock Split, regardless of a majoritywhether our stock is at risk of delisting from Nasdaq, for purposes of enhancing the liquidity of the Common Stock and to facilitate capital raising.

To increase the number of additional shares presentissuable under the Company’s charter.    A Reverse Stock Split will reduce the nominal number of shares of Common Stock outstanding and the number of shares of Common Stock issuable on exercise of Company warrants or representedoptions, while leaving the number of shares issuable under our Charter

AUDIT COMMITTEE REPORT1

The Audit Committee has reviewed and discussed Adial’s audited consolidated financial statements as of and for the year ended December 31, 2020 with the management of Adial and Friedman, Adial’s independent registered public accounting firm. Further, the Audit Committee has discussed with Friedman the matters required towhich equity awards may be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC, and other applicable regulations, relating to the firm’s judgment about the quality, not just the acceptability, of Adial’s accounting principles, the reasonableness of significant judgments and estimates, and the clarity of disclosures in the consolidated financial statements.

The Audit Committee also has received the written disclosures and the letter from Friedman required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, which relate to Friedman’s independence from Adial, and has discussed with Friedman its independence from Adial. The Audit Committee has also considered whether the independent registered public accounting firm’s provision of any non-audit services to Adial is compatible with maintaining the firm’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from Adial and its management. The Audit Committee also considered whether, and determined that, the independent registered public accounting firm’s provision of any other non-audit services to us was compatible with maintaining Friedman’s independence. The Committee also reviewed management’s report on its assessment of the effectiveness of Adial’s internal control over financial reporting. In addition, the Audit Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of Adial’s internal and disclosure control structure. The members of the Audit Committee are not our employees and are not performing the functions of auditors or accountants. Accordingly, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards. Members of the Audit Committee necessarily relygranted will be reduced proportionately based on the information provided to them by management and the independent auditors. Accordingly, the Audit Committee’s considerations and discussions referred to above do not constitute assurance that the audit of our consolidated financial statements has been carried out in accordance with generally accepted accounting principles or that our auditors are in fact independent.

Based on the reviews, reports and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board of Directors resolved that Adial’s audited consolidated financial statements for the year ended December 31, 2020 and management’s assessment of the effectiveness of Adial’s internal control over financial reporting be included in Adial’s Annual Report on Form 10-K for the year ended December 31, 2020, to be filed with the SEC. The Audit Committee has recommended, and the Board of Directors has approved, subject to stockholder ratification, the selection of Friedman as Adial’s independent registered public accounting firm for the year ending December 31, 2021.

Submitted by the Audit Committee of Adial’s Board of Directors.

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​1        The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of Adial under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Fees Paid to the Independent Registered Public Accounting Firmfinal Reverse Stock Split Ratio.

The following table sets forth the aggregate fees including expenses billed to usapproximate number of shares of the Common Stock that would be outstanding immediately after the Reverse Stock Split based on the current authorized number of shares of Common Stock at various exchange ratios, based on 28,516,564 shares of Common Stock actually outstanding as of February 24, 2023. The table does not account for the years ended December 31, 2020 and 2019 by our auditors:fractional shares that will be paid in cash.

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(1)      Audit fees were for professional services rendered for*        Excludes the annual audit and reviewseffect of fractional share treatment.

We are currently authorized to issue a maximum of 50,000,000 shares of our Common Stock. As of the interim results included inRecord Date, there were 28,516,564 shares of our Common Stock issued and outstanding. Although the Forms 10-Qnumber of authorized shares of our Common Stock will not change as a result of the financial statements of the Company, and professional services rendered in connection with our underwritten public offerings of shares as well as services provided with other statutory and regulatory filings.

The Audit Committee has adopted procedures for pre-approving all audit and non-audit services provided by the independent registered public accounting firm, including the fees and terms of such services. These procedures include reviewing detailed back-up documentation for audit and permitted non-audit services. The documentation includes a description of, and a budgeted amount for, particular categories of non-audit services that are recurring in nature and therefore anticipated at the time that the budget is submitted. Audit Committee approval is required to exceed the pre-approved amount for a particular category of non-audit services and to engage the independent registered public accounting firm for any non-audit services not included in those pre-approved amounts. For both types of pre-approval, the Audit Committee considers whether such services are consistent with the rules on auditor independence promulgated by the SEC and the PCAOB. The Audit Committee also considers whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, based on such reasons as the auditor’s familiarity with our business, people, culture, accounting systems, risk profile, and whether the services enhance our ability to manage or control risks, and improve audit quality. The Audit Committee may form and delegate pre-approval authority to subcommittees consisting of one or more members of the Audit Committee, and such subcommittees must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. All of the services provided by the independent registered public accounting firm were pre-approved by the Audit Committee.

PROPOSAL 3

APPROVAL OF AN AMENDMENT TO OUR 2017 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT WE WILL HAVE AUTHORITY TO GRANT UNDER THE PLAN FROM 5,500,000 TO 7,500,000

On October 9, 2017, the Board of Directors adopted, and our stockholders approved on October 9, 2017, the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 Equity Incentive Plan”); however, the 2017 Equity Incentive Plan did not become effective until the business day prior to the public trading of our common stock on the Nasdaq. As of August 18, 2021, there were (i) 1,054,382 shares of common stock available for grant under the 2017 Equity Incentive Plan and (ii) 4,445,618 shares of common stock subject to awards were outstanding under the 2017 Equity Incentive Plan.

In an effort to preserve cash and to attract, retain and motivate persons who make important contributions to our business, we would like to issue securities to our officers, directors and consultants. Management believes thatReverse Stock Split, the number of shares of common stock currently available for issuance under the 2017 Equity Incentive Plan is insufficient to ensure it can meet its needs to provide for awardsour Common Stock issued and outstanding will be reduced in proportion to the 2017 Equity Incentive Plan participants forratio selected by the next 12 months and that it may be insufficient in order to allow usBoard. Thus, the ability to compete successfully for talented employees and consultants.

The Board of Directors has approved, subject to stockholder approval, Amendment No. 3 to the 2017 Equity Incentive Plan, which amendment increases by 2,000,000 the number of shares that may be granted under the 2017 Equity Incentive Plan. The amendment to our 2017 Equity Incentive PlanReverse Stock Split will effectively increase the number of authorized and unissued shares of common stockour Common Stock available for future issuance by the amount of the reduction effected by the Reverse Stock Split.

Following the Reverse Stock Split, the Board will have the authority, subject to applicable securities laws, to issue all authorized and unissued shares without further stockholder approval, upon such terms and conditions as the Board deems appropriate. Although we consider financing opportunities from time to time, we do not currently have any plans, proposals or understandings to issue the additional shares that would be available if the Reverse Stock Split is approved and effected, but some of the additional shares underlie warrants, which could be exercised or converted after the Reverse Stock Split Amendment is effected.

Effects of the Reverse Stock Split

Management does not anticipate that our financial condition, the percentage ownership of Common Stock by management, the number of our stockholders or any aspect of our business will materially change as a result of the Reverse Stock Split. Because the Reverse Stock Split will apply to all issued and outstanding shares of Common Stock

Limitation on Awards and Shares Available

Initially, the aggregate number of shares of Common Stock issued and outstanding, will be reduced in proportion to the Reverse Stock Split Ratio selected by the Board. Correspondingly, our common stockadditional paid-in capital account, which consists of the difference between our stated capital and the aggregate amount paid to the Company upon issuance of all currently outstanding shares of the Common Stock, will be increased by the amount by which the stated capital is reduced. Our stockholders’ equity, in the aggregate, will remain unchanged.

Book-Entry Shares.    If the Reverse Stock Split is effected, stockholders, either as direct or beneficial owners, will have their holdings electronically adjusted by our transfer agent (and, for beneficial owners, by their brokers or banks that was availablehold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split. Banks, brokers, custodians or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding Common Stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split and making payment for fractional shares. If a stockholder holds shares of Common Stock with a bank, broker, custodian or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker, custodian or other nominee. We do not issue physical certificates to stockholders.

No Appraisal Rights.    Under the Delaware General Corporation Law, our stockholders are not entitled to dissenters’ rights or appraisal rights with respect to the Reverse Stock Split described in the Reverse Stock Split Proposal, and we will not independently provide our stockholders with any such rights.

Restricted Stock

Restricted stock may be granted in such amounts and subject to the terms and conditions as determined by the Compensation Committee at the time of grant and as set forth in the award agreement. The Compensation Committee may impose performance goals for restricted stock. The Compensation Committee may authorize the payment of dividends on the restricted stock during the restricted period.

Other Awards

The Compensation Committee may grant other types of equity-based or equity-related awards not otherwise described by the terms of the 2017 Equity Incentive Plan, in such amounts and subject to such terms and conditions, as the Compensation Committee shall determine. Such awards may be based upon attainment of performance goals established by the Compensation Committee and may involve the transfer of actual shares to participants, or payment in cash or otherwise of amounts based on the value of shares.

Amendment and Termination

Our Board of Directors may amend the 2017 Equity Incentive Plan at any time, subject to stockholder approval to the extent required by applicable law or regulation or the listing standards of the Nasdaq or any other market or stock exchange on which the common stock is at the time primarily traded or the provisions of the Code.

Our Board of Directors may terminate the 2017 Equity Incentive Plan at any time providedadministrative interpretations, all shareholder approval has been received to the extent required by the Code, applicable law or the listing standards of Nasdaq or any other market or stock exchange which the common stock is at the time primarily traded. Unless sooner terminated by the Board, the 2017 Equity Incentive Plan will terminate on the close of business on August 30, 2027.

Miscellaneous

The 2017 Equity Incentive Plan also contains provisions with respect to payment of exercise prices, vesting and expiration of awards, treatment of awards upon the sale of our company, transferability of awards, and tax withholding requirements. Various other terms, conditions, and limitations apply, as further described in the 2017 Equity Incentive Plan.

Material Federal Income Tax Consequences

The following is a brief description of the principal federal income tax consequences, as of the date of this proxy statement, associateddocument, and all of which are subject to change, possibly with retroactive effect, and are subject to differing interpretations. Changes in these authorities may cause the granttax consequences to vary substantially from the consequences described below. We have not sought and will not seek an opinion of awards undercounsel or any rulings from the 2017 Equity Incentive Plan. Internal Revenue Service (the “IRS”) with respect to any of the tax considerations discussed below. As a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below.

This summarydiscussion is based on our understandinglimited to U.S. holders that hold Common Stock as “capital assets” within the meaning of present United States federal income tax law and regulations. The summary does not purport to be complete or applicable to every specific situation. Furthermore,Section 1221 of the followingCode (generally, property held for investment). This discussion does not address foreign,any tax consequences arising under the tax on net investment income or the alternative minimum tax, nor does it address any tax consequences arising under the laws of any state, local or localnon-U.S. jurisdiction, U.S. federal estate or gift tax consequences.

Options

Grant.    There is generally no United Stateslaws, or any tax treaties. Furthermore, this discussion does not address all aspects of U.S. federal income taxation that may be applicable to U.S. holders in light of their particular circumstances or to U.S. holders that may be subject to special rules under U.S. federal income tax consequence to the participant solely by reason of the grant of incentive stock options or nonqualified stock options under the 2017 Equity Incentive Plan, assuming the exercise price of the option is not less than the fair market value of the shares on the date of grant.laws, including, without limitation:

Exercise•        .    Thea bank, insurance company or other financial institution;

•        a tax-exempt or a governmental organization;

•        a real estate investment trust;

•        an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity);

•        a regulated investment company or a mutual fund;

•        a dealer or broker in stocks and securities, or currencies;

•        a trader in securities that elects mark-to-market treatment;

•        a holder of Common Stock that received such stock through the exercise of an incentive stockemployee option, pursuant to a retirement plan or otherwise as compensation;

•        a person who holds Common Stock as part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk reduction transaction;

•        a corporation that accumulates earnings to avoid U.S. federal income tax;

•        a person whose functional currency is not the U.S. dollar;

•        a taxable eventU.S. holder who holds Common Stock through non-U.S. brokers or other non-U.S. intermediaries;

The participant’sfractional share of Common Stock, as discussed below. A U.S. holder’s aggregate tax basis in the shares acquiredof Common Stock received pursuant to the exercise of an option will beReverse Stock Split should equal the amount paid upon exercise plus, in the case of a nonqualified stock option, the amount of ordinary income, if any, recognized by the participant upon exercise thereof.

Qualifying Disposition.    If a participant disposes of shares of our common stock acquired upon exercise of an incentive stock option in a taxable transaction, and such disposition occurs more than two years from the date on which the option was granted and more than one year after the date on which the shares were transferred to the participant pursuant to the exercise of the incentive stock option, the participant will realize long-term capital gain or loss equal to the difference between the amount realized upon such disposition and the participant’s adjustedaggregate tax basis in such shares (generally the option exercise price).

Disqualifying Disposition.    If the participant disposes of shares of our common stock acquired upon the exercise of an incentive stock option (other than in certain tax free transactions) within two years from the date on which the incentive stock option was granted or within one year after the transfer of shares to the participant pursuant to the exercise of the incentive stock option, at the time of disposition the participant will generally recognize ordinary income equal to the lesser of: (i) the excess of each such share’s fair market value on the date of exercise over the exercise price paid by the participant or (ii) the participant’s actual gain. If the total amount realized on a taxable disposition (including return on capital and capital gain) exceeds the fair market value on the date of exercise of the shares of our common stock purchased by the participant under the option, the participant will recognize a capital gainCommon Stock surrendered (excluding any portion of such basis that is allocated to any fractional share of Common Stock), and such U.S. holder’s holding period in the amountshares of Common Stock received should include the holding period in the shares of Common Stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the excess. Ifshares of Common Stock surrendered to the participant incursshares of Common Stock received in a loss onrecapitalization pursuant to the disposition (the total amount realized is less than the exercise price paid by the participant), the loss will be a capital loss.

Other Disposition.    If a participant disposesReverse Stock Split. U.S. holders of shares of our common stockCommon Stock acquired upon exerciseon different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.

Cash in Lieu of Fractional Shares

A U.S. holder of Common Stock that receives cash in lieu of a nonqualified stock optionfractional share of Common Stock pursuant to the Reverse Stock Split and whose proportionate interest in a taxable transaction, the participant willus is reduced (after taking into account certain constructive ownership rules) should generally recognize capital gain or loss in an amount equal to the difference between the participant’samount of cash received and the U.S. holder’s tax basis (as discussed above) in the shares sold and the total amount realized upon disposition. Anyof Common Stock surrendered that is allocated to such fractional share of Common Stock. Such capital gain or loss (and anyshould be long-term capital gain or loss recognized onif the U.S. holder’s holding period for Common Stock surrendered exceeds one year at the effective time of the Reverse Stock Split. The deductibility of capital losses is subject to limitations. A U.S. Holder that receives cash in lieu of a disqualifying disposition of sharesfractional share of our common stock acquired upon exercise of incentive stock optionspursuant to the Reverse Stock Split and whose proportionate interest in us is not reduced (after taking into account certain constructive ownership rules) should generally be treated as discussed above)having received a distribution that will be shorttreated first as dividend income to the extent paid out of our current or accumulated earnings and profits, and then as a tax-term-free or long-term depending on whetherreturn of capital to the sharesextent of the U.S. Holder’s tax basis in our common stock, were held for more than one year fromwith any remaining amount being treated as capital gain. U.S. holders should consult their tax advisors regarding the date suchtax effects to them of receiving cash in lieu of fractional shares were transferredbased on their particular circumstances.

Stock Appreciation Rights

There are generally no tax consequences to the participant or us by reason of the grant of stock appreciation rights. In general, upon exercise of a stock appreciation rights award, the participant will recognize taxable ordinary income equal to the excess of the stock’s fair market valuevote on the date of exercise over the stock appreciation rights’ base price, or the amount payable. Generally, with respect to employees, the Companythis proposal is required to withhold from regular wagesapprove this proposal. Each of the failure to vote by proxy or supplemental wage payments an amount basedto vote in person and a broker non-vote will have no effect on the ordinary income recognized. SubjectAdjournment Proposal. An abstention will have the same practical effect as a vote against this proposal. As described above, we expect that the Adjournment Proposal is considered a “routine” matter. Therefore, your broker, bank or other nominee may vote your shares without receiving instructions from you on this proposal and accordingly, we do not expect any broker non-votes on this proposal. A failure to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, the Company generally will be entitledinstruct your broker, bank or other nominee on how to a business expense deduction equal to the taxable ordinary income realized by the participant.

Restricted Stock

Unless a participant makes a Section 83(b) election, as described below, with respect to restricted stock granted under the 2017 Equity Incentive Plan, a participant receiving such an awardvote your shares will not recognize U.S. taxable ordinary income and we will not be allowed a deduction at the time such award is granted. While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize compensation income equal to the amount of any dividends received and we will be allowed a deduction in a like amount. When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimednecessarily count as a deduction for federal income tax purposes by us. Upon dispositionvote against this proposal.

Board Recommendation

Our Board recommends that you vote “FOR” the Adjournment Proposal.