1180 Seminole Trail, Suite 495
Charlottesville, Virginia 22901

PROXY STATEMENT

For the Annual Meeting of Stockholders to be held on November 2, 2023

GENERAL INFORMATION

We are providing these proxy materials to holders of shares of common stock, $0.001 par value per share, of Adial Pharmaceuticals, Inc., 2023: Pursuanta Delaware corporation (referred to SEC rules,as “Adial,” the “Company,” “we,” or “us”), in connection with respectthe solicitation by the Board of Directors (the “Board” or “Board of Directors”) of Adial of proxies to be voted at our 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting” or the Special Meeting, we have elected“Annual Meeting”) to utilize the “full set delivery” option of providing paper copies of allbe held on November 2, 2023, beginning at 9:00 a.m., local time at 675 Peter Jefferson Parkway, Suite 400, Charlottesville, Virginia 22911, and at any adjournment or postponement of our proxy materials by mail. 2023 Annual Meeting.

The purpose of the 2023 Annual Meeting and the matters to be acted on are stated in the accompanying Notice of Special Meeting and Proxy Statement are also available at www.proxyvote.com.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

What is a proxy?

A proxy is another personAnnual Meeting. The Board of Directors knows of no other business that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.” By usingwill come before the methods discussed below, you will be appointing Cary Claiborne and Joseph Truluck as your proxy. The proxy agent will vote on your behalf, and will have the authority to appoint a substitute to act as proxy. If you are unable to attend the Special Meeting, please vote by proxy so that your shares may be voted.

What is a proxy statement?

A proxy statement is a document that regulations of the Securities and Exchange Commission (“SEC”) require that we give to you when we ask you to sign a proxy card to vote your stock at the Special2023 Annual Meeting.

What proposals are being presented for a stockholder vote at the Special Meeting?

At the Special Meeting, stockholders will act upon the following proposals:

Why is the Company electing to effect a reverse stock split?

Our Board has unanimously adopted a resolution declaring advisable, and recommendingof Directors is soliciting votes (1) FOR each of the two (2) nominees for Class II directors named herein for election to our stockholdersBoard of Directors; (2) FOR the ratification of the appointment of Marcum LLP (“Marcum”) as our independent registered public accounting firm for theirour fiscal year ending on December 31, 2023; and (3) FOR the approval of an amendment to our Charter authorizing the Reverse Stock Split at a ratio in the Range, such ratio2017 Equity Incentive Plan to be determined by the Board and included in a public announcement, and granting the Board the discretion to file a certificate of amendment to our Charter with the Secretary of State of the State of Delaware effecting the Reverse Stock Split at any time prior to the one-year anniversary of the date on which the Reverse Stock Split is approved by our stockholders at the Special Meeting or to abandon the Reverse Stock Split altogether. The form of the proposed Reverse Stock Split Amendment is attached to this proxy statement as Annex A. The Reverse Stock Split Amendment will effect the Reverse Stock Split by reducing the number of outstanding shares of Common Stock as compared to the number of outstanding shares immediately prior to the effectiveness of the Reverse Stock Split, but will not increase the par value of Common Stock, and will not change the number of authorized shares of our capital stock. Stockholders are urged to carefully read Annex A. If implemented, the number of shares of common stock that we will have authority to grant under the plan (as adjusted to reflect the recent stock 1:25 reverse stock split that we effected on August 4, 2023) from 380,000 to 500,000.

On or about October 5, 2023, we will begin mailing this proxy statement, together with our Common Stock owned by eachAnnual Report on Form 10-K for the year ended December 31, 2022 and our recast financial information and related disclosures included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which are not a part of our stockholders will be reduced by the same proportion as the reduction in the total number of shares of our Common Stock outstanding, so that the percentage of our outstanding Common Stock owned by each of our stockholders will remain approximately the same except with respect to fractional shares.proxy solicitation materials.

ANNUAL MEETING ADMISSION

What are the consequences if the Reverse Stock Split Proposal is not approved by stockholders?

IfAll stockholders fail to approve the Reverse Stock Split Proposal our Board would not have the authority to effect the Reverse Stock Split to, among other things, facilitate the continued listing of our Common Stock on The Nasdaq Stock Market LLC (“Nasdaq”) by increasing the per share trading price of our Common Stock to help ensure a share price high enough to satisfy the $1.00 per share minimum bid price requirement. Any inability of our Board to effect the Reverse Stock Split could expose us to delisting from Nasdaq. Moreover, we have a limited number of authorized shares of Common Stock available under our Charter, and failure to approve the Reverse Stock Split Proposal may limit our ability to raise capital through the sale of Common Stock.

What is the record date and what does it mean?

The Record Date to determine the stockholders entitled to notice of and to vote at the Special Meeting is the close of business on February 24, 2023. The Record Date is established by the Board as required by Delaware law. On the Record Date, 28,516,564 shares of Common Stock were issued and outstanding.

Who is entitled to vote at the Special Meeting?

Holders of record of our Common Stock as of the close of business on the Record Date will be entitled to notice of and to vote at the Special Meeting and at any adjournments or postponements thereof. Holders of record of shares of Common Stock have the right to vote on all matters brought before the Special Meeting.

You do not need to attend the Special Meeting to vote your shares. Instead, you may vote your shares by marking, signing, dating and returning the enclosed proxy card or voting through the Internet.

What are the voting rights of the stockholders?

Each share of our Common Stock outstanding as of the record date is entitledare welcome to one vote perattend the 2023 Annual Meeting. If you attend, please note that you will be asked to present government-issued identification (such as a driver’s license or passport) and evidence of your share ownership of our common stock on all matters properly brought before the Specialrecord date. This can be your proxy card if you are a stockholder of record. If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to attend the 2023 Annual Meeting, you will be required to present proof of your ownership of our common stock on the record date, such as a bank or brokerage account statement and voting instruction card, to be admitted to the 2023 Annual Meeting.

No cameras, recording equipment or electronic devices will be permitted in the 2023 Annual Meeting.

If your shares are registered directly in your name with ourAdial’s transfer agent, VStock Transfer, LLC, you are considered the stockholder“stockholder of record with respect torecord” of those shares. The notice of the Special Meeting has beenshares and this proxy statement is being sent directly to you by us.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 2023 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 if you are a beneficial holder and http://www.vstocktransfer.com/proxy if you are a record holder and follow the instructions), 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 2023 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

If you are a beneficial holder and choose to submit a proxy by internet, go to www.proxyvote.com to complete an electronic proxy card. If you are a record holder and choose to submit a proxy by internet, go to http://www.vstocktransfer.com/proxy 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. Your internet vote must be received by 11:59 p.m. Eastern Daylight Time on November 1, 2023 to be counted.

Submit a Proxy at the 2023 Annual Meeting

Submitting a proxy by mail or internet will not limit your right to vote at the 2023 Annual Meeting if you decide to attend in person.

Beneficial Owners of Shares Held in Street Name

If your shares are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. Youyou are considered the beneficial owner“beneficial owner” of these shares and your shares are held in “street name.” A notice orstreet name, and this proxy statement and voting instruction card have beenis being forwarded to you by your nominee.broker, bank or nominee, who is considered the stockholder of record of those shares. As thea beneficial owner, you have the right to direct your broker, bank or nominee concerningon 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 2023 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 attending the 2023 Annual Meeting, you may 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.

ADDITIONAL INFORMATION ABOUT VOTING

Q:     What information is contained in this proxy statement?

A:     The information included in this proxy statement relates to the proposals to be voted on at the 2023 Annual Meeting, the voting process, the compensation of our directors and executive officers, and other required information.

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

A:     This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2022 are available at www.adial.com.

Q:     What items of business will be voted on at the 2023 Annual Meeting?

A:     The three (3) items of business scheduled to be voted on at the 2023 Annual Meeting are: (1) the election of the two (2) Class II nominees named herein as directors; (2) the ratification of the appointment of Marcum as our independent registered public accounting firm for our fiscal year ending on December 31, 2023; 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 (as adjusted to reflect the recent stock 1:25 reverse stock split that we effected on August 4, 2023) from 380,000 to 500,000. We will also consider any other business that properly comes before the 2023 Annual Meeting.

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

A:     The Board of Directors recommends that you vote your shares (1) FOR each of the two (2) Class II nominees named herein for election to our Board of Directors; (2) FOR the ratification of the appointment of Marcum as our independent registered public accounting firm for our fiscal year ending on December 31, 2023; 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 (as adjusted to reflect the recent stock 1:25 reverse stock split that we effected on August 4, 2023) from 380,000 to 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 September 28, 2023, 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 as a stockholder of record and as a beneficial owner?

A:     Most of our stockholders hold their shares through a broker 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 grant your voting proxy directly or to directly vote in person at the 2023 Annual Meeting.

         Beneficial Owner of Shares Held in Street Name.    If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of 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 2023 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 attending the 2023 Annual 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 by usingin its discretion on certain matters considered routine, such as the voting instructions they includedratification of the appointment of independent auditors. The uncontested election of directors 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 mailing or by following their instructions for voting by telephone or the Internet.

Broker non-votes occur when shares are held indirectly through a broker, bank or other intermediary on behalfpresence of a beneficial owner (referred toquorum, but not 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 (i) the broker does not have discretionary voting authority on the matter or (ii) the broker chooses notshares entitled to vote on a matter for which it has discretionaryparticular 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 2023 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 or internet), subject to the voting authority. Underdeadlines that are described on the rulesproxy 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 2023 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 2023 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 New York Stock Exchange (the “NYSE”) that govern how brokerstwo (2) nominees for Class II directors named herein or you may direct your 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.

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 ruleseither or both of the NYSE, Proposal 1 and Proposal 2 are each considered a “routine” matter. Accordingly, brokers will have such discretionary authoritynominees.

         With respect to vote on suchthe other two (2) proposals, in their discretion, andyou may vote “FOR,” “AGAINST,”FOR, AGAINST, or “ABSTAIN” with respect to such proposals. However, this remains subject toABSTAIN. On these proposals, if you ABSTAIN, it has the final determination from the NYSE regarding which of the proposals are “routine” or “non-routine.”same effect as a vote AGAINST.

We encourageIf you to provide specific instructions, to your brokerage firm via the Internet or telephone or by returning your signed voting instruction card. This ensures that your shares will be voted at the Special Meeting with respect to the proposals described in this proxy statement.

When and where is the Special Meeting and what do I need to be able to attend in person?

The Special Meeting will be held on             , 2023, at 10:00 a.m. Eastern Time at 1180 Seminole Trial, Suite 495, Charlottesville, VA 22901. Any stockholder who owns our Common Stock on the Record Date can attend the Special Meeting in person.

The meeting will begin promptly at 10:00 a.m. Eastern time. We encourageas you to arrive at the meeting prior to the start time and you should allow ample time for the check-in procedures.

How do I cast my vote?

instruct. If you are a stockholder of record there are four ways to vote:

By completingholder and submitting a proxy, you will direct the designated persons (known as “proxies”) to votesubmit your stock at the Special Meeting in accordance with your instructions. The Board has appointed Cary Claiborne, our Chief Executive Officer, and Joseph Truluck, our Chief Financial Officer, to serve as the proxies for the Special Meeting.

In order to be counted, proxies submitted by telephone or Internet must be received by 11:59 p.m. Eastern time on             , 2023. Proxies submitted by U.S. mail must be received before the start of the Special Meeting.

Your proxy will be voted according to your instructions. If you are a stockholder of record and do not vote via the Internet or telephone or by returning a signed proxy card your shares will not be voted unless you attend the Special Meeting and vote your shares in person. If you vote via the Internet or telephone and do not specify contrary votingwith 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 II directors for election to our Board of Directors; (2) FOR the ratification of the appointment of Marcum our independent registered public accounting firm for the year ending December 31, 2023; 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 (as adjusted to reflect the recent stock 1:25 reverse stock split that we effected on all matters. Similarly, if you sign and submitAugust 4, 2023) from 380,000 to 500,000. If any other matters properly arise at the meeting, your proxy, cardtogether with nothe other proxies received, will be voted 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.

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 holders of 33.4% of the outstanding shares of stock entitled to vote on September 28, 2023 are necessary to constitute a quorum. Abstentions are treated as present for purposes of determining whether a quorum exists. Your shares will be votedcounted towards the quorum only if you submit a valid proxy (or in accordance with the recommendationscase of our Boarda beneficial owner, one is submitted on all matters. Noyour behalf by your broker, bank or other businessnominee) or if you vote in person at the 2023 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 shares present in person or represented by proxy at the 2023 Annual Meeting and entitled to vote on the election of directors) will be consideredelected. 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 Marcum, as our independent registered public accounting firm for the year ending December 31, 2023, 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 Special2023 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 2023 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 2023 Annual Meeting, and therefore will have no effect on the outcome of this proposal.

If your shares are held in “street name,” meaning they are held for your account by an intermediary, such as a bank, broker or other nominee, thenname” and you are deemed to be the beneficial owner of your shares and the broker that actually holds the shares fordo not indicate how you is the record holder and is requiredwish to vote, the shares it holds on your behalf accordingbroker is permitted to your instructions. The proxy materials, as well as voting and revocation instructions, should have been forwarded to you by the bank, broker or other nominee that holds your shares. In orderexercise its discretion to vote your shares you will needon certain “routine” matters. The only routine matter to followbe submitted to our stockholders at the instructions that your bank,2023 Annual Meeting is Proposal 2. For purposes of Proposal 1 and Proposal 3, 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 onnon-votes are not considered to be “votes cast” at the voting processes of the bank, broker or other nominee that holds your shares. Therefore, we urge you to carefully review and follow the voting instruction card and any other materials that you receive from that organization.

In the event you do not provide instructions on how to vote, we expect that your broker will have authority to vote your shares with respect to the Reverse Stock Split Proposalmeeting 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 “routine” matter. Accordingly, your broker, bank or other nominee may vote your shares without receiving 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 your shares will not necessarily count as a vote against Proposal 1 (Reverse Stock Split Proposal) and Proposal 2 (Adjournment Proposal).

What if I return a proxy card or otherwise submit a proxy but do not make specific choices?

If you are a record holder and return a signed and dated proxy card or otherwise submit a proxy without marking voting selections, your shares will be voted, as applicable, FOR Proposal 1—the Reverse Stock Split Proposal and FOR Proposal 2—the Adjournment Proposal.

Who counts the votes?

All votes will be tabulated by the inspector of election appointed for the Special Meeting. Each proposal will be tabulated separately.

What are my choices when voting?

How does the Board recommend I vote on the proposals?

The Board recommends you vote:

What is a “quorum?”

A quorum is the minimum number of shares required to be present or represented by proxy at the Special Meeting to properly hold a meeting of stockholders and conduct business under our Amended and Restated Bylaws and Delaware law. The presence, in person or by proxy, of thirty-three and four-tenths percent (33.4%) of the voting power of the stock issued, outstanding and entitled to vote at the Special Meeting will constitute a quorum at the Special Meeting. Abstentions and broker non-votes will be counted as shares present and entitled to vote for the purposes of determining a quorum for the Special Meeting.

What vote is required to approve each item?

How are abstentions and broker non-votes treated?

Abstentions are included in the determination of the number of shares of Common Stock present at the Special Meeting for determining a quorum at the meeting. An abstention is not an “affirmative vote,” but an abstaining stockholder is considered “entitled to vote” at the Special Meeting. Accordingly, an abstentionmeeting. As such, a broker non-vote will not be counted as a vote FOR or WITHHELD with respect to a director in Proposal 1 or a vote FOR or AGAINST with respect to Proposal 3; and, therefore, will have no effect on the outcome of the vote on any such proposal. Abstentions will be counted in determining the total number of “votes cast” and the total number of shares present in person or represented by proxy and entitled to vote on each of the proposals and will therefore have the effect of a vote against ProposalsAGAINST on each proposal, except for Proposal 1, and 2.

Broker non-voteswhere the abstention will be included in the determination of the number of shares of Common Stock present at the Special Meeting for determining a quorum at the meeting. Because your broker will have discretionary voting authority with respect to Proposals 1 and 2, we do not expect to have any broker-non-votes; however, if we were to have a broker-non-vote it would have no effect on upon the approvaloutcome of Proposal 2 as broker non-votes are not considered “entitled tothe vote.” Broker non-votes, to the extent applicable, will have the effect of a vote against Proposal 1.

         We recommend you vote FOR the two (2) nominees and FOR the other two (2) proposals.

IfQ:     What should I do if I receive more than one proxy statement?

A:     You may receive more than one proxy statement. For example, if you are a stockholder of record and your shares are held in the name of a bank, broker or other nominee, you should check with your bank, broker or other nominee and follow the voting instructions provided. Attendance at the Special Meeting alone will not revoke your proxy.

Can I revoke or change my proxy?

You may revoke your proxy and change your vote at any time before the final vote at the Special Meeting. You may vote again on a later date via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Special Meeting will be counted), by signing and returning a proxy card or voting instructions form with a later date, or by attending the Special Meeting and voting in person. However, your attendance at the Special Meeting will not automatically revoke your proxy unless you vote again at the Special Meeting or specifically request that your prior proxy is revoked by delivering to the Company’s corporate secretary at 1180 Seminole Trail, Suite 495, Charlottesville, Virginia 22901 a written notice of revocation prior to the Special Meeting.

Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Special Meeting?

No. None of the stockholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the Special Meeting.

What does it mean if I get more than one set of voting materials?

Your shares are probably registered in more than one account.name, you will receive more than one proxy statement. Please follow the separate voting instructions that you received for your shareson all of Common Stock held in each of your different accountsthe proxy statements to ensure that all of your shares are voted.

Q:     Where can I find the voting results of the 2023 Annual Meeting?

A:     We intend to announce preliminary voting results at the 2023 Annual Meeting and publish final results in a Current Report on Form 8-K, which we expect will be filed within four (4) business days of the 2023 Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four (4) business days after the 2023 Annual Meeting, we intend to file a Current Report on Form 8-K to publish preliminary results and, within four (4) business days after the final results are known to us, file an additional Current Report on Form 8-K to publish the final results.

Q:     What happens if additional matters are presented at the solicitation expenses2023 Annual Meeting?

A:     Other than the three (3) items of business described in this proxy statement, we are not aware of any other business to be acted upon at the 2023 Annual Meeting. If you grant a proxy, the persons named as proxy holders, Mr. Cary J. Claiborne, our Chief Executive Officer and who paysMr. Joseph Truluck, our Chief Financial Officer, will

have the discretion to vote your shares on any additional matters properly presented 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 September 28, 2023, the record date, is entitled to be voted on all items being voted on at the 2023 Annual Meeting, with each share being entitled to one vote on each matter. As of the record date, September 28, 2023, 1,217,981 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 bear the cost of soliciting votes for the 2023 Annual Meeting?

A:     The Board of Directors is making this proxy solicitation?

Our Board is asking for your proxy and wesolicitation on behalf of Adial, which will pay allthe entire cost of the costspreparing, assembling, printing, mailing, and distributing these proxy materials. Certain of asking for stockholder proxies. Weour directors, officers, and employees, without any additional compensation, may also solicit your vote in person, by telephone, or by electronic communication. On request, we will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocketout-of-pocket expenses for forwarding proxy and solicitation materialmaterials to the beneficial owners of Common Stock and collecting voting instructions. We may use officers and employees of the Company to ask for proxies, as described below.

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

No.stockholders. In addition to the solicitationuse of the mail, proxies wemay be solicited by personal interview, telephone, telegram, facsimile and advertisement in periodicals and postings, in each case by our directors, officers and employees without additional compensation.

Q:     When are stockholder proposals 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 June 1, 2024, to the attention of the Corporate Secretary of Adial Pharmaceuticals, Inc. at 1180 Seminole Trail, Suite 495, Charlottesville, Virginia 22901 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 2024 Annual Meeting, but does not intend to have engaged D.F. King & Co., Inc.,included in the proxy solicitation firm hiredmaterials prepared by the Company in connection with the 2024 Annual Meeting, must be delivered in writing to the Corporate Secretary at an approximate costthe address above no later than the 90th day nor earlier than the 120th day before the first anniversary of $10,000, plus reimbursementthe prior year’s meeting. However, if we hold the 2024 Annual Meeting on a date that is not within 30 days before or after such anniversary date, we must receive the notice not earlier than the close of expenses,business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of the 2024 Annual Meeting is first made by us. See “STOCKHOLDER PROPOSALS FOR THE 2024 ANNUAL MEETING” elsewhere in this proxy statement for additional information regarding stockholder proposals and director nominations at our 2024 Annual Meeting. In addition to satisfying the foregoing requirements, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than September 3, 2024. If such meeting date is changed by more than 30 days, then notice pursuant to Rule 14a-19 must be provided by the later of 60 calendar days prior to the date of the annual meeting or the 10th calendar day following the day on behalfwhich public announcement of the date of the annual meeting is first made.

PROPOSAL 1

ELECTION OF DIRECTORS

Our Board of Directors currently consists of six (6) directors and pursuant to the terms of our Board. D.F. Kingcertificate 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: J. Kermit Anderson, Cary J. Claiborne, Robertson H. Gilliland, Tony Goodman, Kevin Schuyler (Chairman of the Board), and James W. Newman. Upon resignation of William B. Stilley on September 18, 2023, the classes of our Board of Directors were not evenly distributed. To evenly distribute the classes of our Board of Directors, on September 29, 2023 Tony Goodman resigned as a Class II director and the Board of Directors re-appointed him as a Class I director on the same day. Our Board of Directors is currently divided into three classes as follows:

•        Class I, which consists of Kevin Schuyler and Tony Goodman and will stand for election at the 2025 Annual Meeting;

•        Class II, which consists of Cary J. Claiborne and Robertson H. Gilliland and 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. and will stand for election at the 2024 Annual Meeting of Stockholders.

Our Board of Directors proposed that each of the two (2) Class II nominees named below, each of whom is currently serving as a director in Class II, be elected as a Class II director for a three-year term expiring at the 2026 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. Each of the nominees have consented to being named in this proxy statement and to serve as a director if elected.

Messrs. Claiborne and Gilliland have been nominated by our Nominating and Corporate Governance Committee and Board of Directors for the election as Class II directors. The Board of Directors believes that it is in the best interests of our company to elect the above-described Class II director nominees, each to serve as a director until the 2026 annual meeting of stockholders and until his successor shall have been duly elected and qualified. The Board believes that each of the nominees is highly qualified 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.

The Nominating and Corporate Governance Committee also will consider nominees recommended by our stockholders. The Nominating and Governance Committee does not distinguish between nominees recommended by our stockholders and those recommended by other parties. The Nominating and Governance 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 Governance Committee does not have a set policy or process for considering diversity in identifying nominees, but 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.

Shares represented by proxies will be voted “FOR” the election of the two (2) nominees (Messrs. Claiborne and Gilliland), 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 2023 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. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes for the election of directors.

THE NOMINEES

Set forth below are our two (2) director nominees, 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 2023 Annual Meeting:

Cary J. Claiborne, Chief Executive Officer, President, and Director

Cary J. Claiborne has served as our Chief Executive Officer since August 18, 2022, our Chief Operating Officer from December 2021 to August 18, 2022 and a director since November 2021. In December 2021, Mr. Claiborne was appointed to the board of directors of NeuroSense Therapeutics, a Nasdaq-listed clinical-stage biopharmaceutical company, focusing on the discovery and development of targeted innovative therapeutics for neurodegenerative diseases, where he also serves as Chairman of the audit committee. In July 2022, Mr. Claiborne was appointed to the board of directors of LadRX Corporation (fka CytRx Corporation), a biopharmaceutical company focused on discovering and developing new cancer therapeutics, where he also serves as Chairman of the compensation committee.

Prior to joining Adial, Mr. Claiborne served as CEO of Prosperity Capital Management, LLC, a Private Investment and Advisory firm that he founded. Prosperity Capital is focused on private Investment Management and providing Advisory Services to clients in multiple industries with an emphasis in the Pharma/Biotech and Finance sectors. From November 2014 until February 2017, he served as the Chief Financial Officer and member of the board of directors at Indivior PLC, a FTSE 500 listed specialty pharmaceutical company. Mr. Claiborne led the company’s spin off from its then parent company, Reckitt Benckiser, to become an independent, listed company. While at Indivior, he established and oversaw corporate reporting, internal audit, tax, treasury, external audit and information technology. Prior to joining Indivior, Mr. Claiborne served as the CFO of Sucampo Pharmaceuticals, Inc., a Nasdaq-listed global biopharmaceutical company, which was later sold to Mallinckrodt. Before joining Sucampo, Mr. Claiborne served as CFO and Corporate Secretary of Osiris Therapeutics, Inc., and oversaw corporate finance during the company’s initial public offering.

Mr. Claiborne graduated from Rutgers University with a B.A. in Business Administration and from Villanova University with an M.B.A., and was a National Association of Corporate Directors (NACD) Governance Fellow.

We selected Mr. Claiborne to serve on our Board of Directors because he brings extensive public company experience and his broad understanding of the financial markets and the financing opportunities available to us.

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.

Vote Required

Provided that a quorum is present, the nominees for director receiving a plurality of the votes cast at the 2023 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 “FOR”
THE ELECTION OF EACH OF THE TWO CLASS II NOMINEES

Board Diversity Matrix (as of September 28, 2023)

CONTINUING DIRECTORS

The directors who are serving terms that end following the 2023 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

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

Kevin Schuyler has served as our non-executive Chairman of the Board since August 2022, our director since April 2016 and is our Lead Independent Director. From April 2016 to August 2022, he served as our Vice Chairman of the Board of Directors. He currently serves as a director of Twin Vee PowerCats Co., a Nasdaq-listed designer, manufacturer, distributor, and marketer of power sport catamaran boats based in Fort Pierce, Florida for over 27 years, where he also serves as Chairman of the audit committee, and a director of ForzaX1, Inc, a Nasdaq-listed developer of electric sport boats with a mission to inspire the adoption of sustainable recreational boating, where he also serves as Chairman of the audit committee. Mr. Schuyler is also senior managing director at CornerStone Partners, a full-service institutional CIO and investment office located in Charlottesville, Virginia, with approximately $13 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.

Tony Goodman, Director

Tony Goodman has served as a director since July 2017 and began providing consulting services to us in March 2023. 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, a FTSE 500 listed company 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 completed the requirements of 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 experience with the NACD provides him with a broad understanding of the role of directors and corporate governance issues facing public companies.

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 cost to consumers. Mr. Newman received a B.A. degree from Upsala College in 1968.

We selected Mr. Newman 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.

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, James W. Newman, Jr., and Kevin Schuyler, representing four 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. Claiborne is not “independent” as defined under the listing standards of Nasdaq due to his employment by us and Mr. Goodman is not “independent” as defined under the listing standards of Nasdaq due to the compensation for the consulting services he provides to us. Mr. Stilley, who served as a director until September 18, 2023, was not independent due to his employment by us and our subsidiary.

We currently have: (1) an Audit Committee comprised of Kevin Schuyler, James Newman and J. Kermit Anderson, 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 J. Kermit Anderson and Robertson H. Gilliland, each of whom is deemed to be independent in accordance with the Nasdaq definition of independence. Effective immediately after the 2023 Annual Meeting, Robertson H. Gilliland will be appointed to serve as a member of the Compensation Committee, together with James Newman and J. Kermit Anderson. Robertson H. Gilliland is deemed to be independent in accordance with the Nasdaq definition of independence and satisfies the independence criteria set forth in Rule 10C-1 under the Exchange Act.

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.

____________

(1)      Effective immediately after the 2023 Annual Meeting, Robertson H. Gilliland will be appointed to serve as a member of the Compensation Committee.

Board Composition and Election of Directors

Our Board of Directors consists of six members: Messrs. Kermit Anderson, Robertson Gilliland, Tony Goodman, James Newman, Kevin Schuyler and Cary Claiborne. Our Board of Directors has undertaken a review of its composition and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that each of Messrs. Kermit Anderson, Robertson Gilliland, James Newman, and Kevin Schuyler is “independent” under the applicable rules of the SEC and Nasdaq and that each of Messrs. Claiborne and Goodman is not “independent” as defined under such rules. In making such determination, our Board of Directors considered the relationship that each such 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. Claiborne is not an independent director under these rules because he is our Chief Executive Officer and President, and Mr. Goodman is not an independent director due to the consulting arrangement that we entered into with him in March 2023.

Corporate Governance

Board Committees

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. From time to time, the Board of Directors may solicitalso establish ad hoc committees to address particular matters.

Audit Committee

The members of our Audit Committee are Messrs. Schuyler, Newman, and Anderson each of whom has been determined by our Board of Directors to be independent under applicable Nasdaq and SEC rules and regulations. Mr. Schuyler is the returnchair of proxies, eitherthe Audit Committee. The Audit Committee operates pursuant to a written charter adopted by mail, telephone, telecopy, e-mailthe Board of Directors, which is available on our website at www.adial.com. The charter describes the nature and scope of responsibilities of the Audit Committee. Our Audit Committee’s responsibilities include, among others:

•        appointing, approving 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;

•        overseeing our internal audit function;

•        discussing our risk management policies;

•        establishing policies regarding hiring employees from our independent registered public accounting firm and 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 or ratifying any related person transactions; and

•        preparing the Audit Committee report required by Securities and Exchange Commission, or 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.

Compensation Committee

The members of our Compensation Committee are currently Messrs. Anderson and Newman, each of whom has been determined by our Board of Directors to be independent under current Nasdaq rules and regulations. Effective immediately after the 2023 Annual Meeting, Robertson H. Gilliland will be appointed to serve as a member of the Compensation Committee, together with Messrs. Anderson and Newman. Robertson H. Gilliland is deemed to be independent under current Nasdaq rules and regulations. Mr. Anderson is the chair of the Compensation Committee. The Compensation Committee operates pursuant to a written charter adopted by the Board of Directors, which is available on our website at www.adial.com. The charter describes the nature and scope of responsibilities of the Compensation Committee. Our Compensation Committee’s responsibilities include, among others:

•        reviewing and approving 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 other executive officers;

•        reviewing and approving and, when appropriate, recommending to the Board of Directors for approval, incentive compensation plans and equity-based plans, and where appropriate or required, recommending for approval by the stockholders of the Company, the adoption, amendment or termination of such plans; and administering such 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 employment agreements or severance arrangements or plans; and

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

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Messrs. Gilliland, and Schuyler, each of whom has been determined by our Board of Directors to be independent under current Nasdaq rules. Mr. Gilliland is the chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance

Committee operates pursuant to a written charter adopted by the Board of Directors, which is available on our website at www.adial.com. The charter describes the nature and scope of responsibilities of the Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee’s responsibilities include, among others:

•        identifying and recommending candidates to fill vacancies on the Board of Directors and for election by the stockholders;

•        recommending committee and chairperson assignments for directors to 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;

•        overseeing the Company’s corporate governance practices, including reviewing and recommending to the Board of Directors for approval any changes to the documents and policies in the Company’s corporate governance framework, including its certificate of incorporation and bylaws; and

•        monitoring compliance with the Company’s Code of Business Conduct and Ethics, investigating alleged breaches or violations thereof and enforcing its provisions.

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 the Company during such director’s term, including the number of meetings attended, level of participation, quality of performance, and any transactions with the 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.” The Nominating and Corporate Governance 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. The Nominating and Corporate Governance 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 does not have a set policy or process for considering diversity in identifying nominees, but 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.

Board of Directors Leadership Structure

The Board of Directors does not have a policy that requires the separation of the roles of Chief Executive Officer and Chairman of the Board of Directors, or requiring a separate lead independent director. The Board of Directors annually reviews its leadership structure to assess what best serves the interests of the Company and its shareholders at a given time. Currently, the positions of Chief Executive Officer and Chairman of the Board of Directors are held by different persons. Our Chairman of the Board of Directors, who is also our lead independent director is Kevin Schuyler. In that role, he presides over the executive sessions of the Board of Directors, during which our independent directors meet without management, and he serves as the principal liaison between management and the independent directors of the Board of Directors. As our Chief Executive Officer, Mr. Claiborne is responsible for our day-to-day

operations and for executing our long-term strategies. Our Board of Directors has determined its leadership structure is appropriate and effective for us at this time due to the separation of roles of Chief Executive Officer and Chairman of the Board of Directors.

Risk Oversight

One of the Board of Directors’ key functions is informed oversight of our risk management process. The Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through personal contact. The feesthe Board of D.F. King & Co., Inc.Directors as a whole, as well as through various standing committees of the Board of Directors that address risks inherent in their respective areas of oversight. In particular, the Board of Directors is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for us. Our Board of Directors monitors our exposure to a variety of risks through our Audit Committee. Our Audit Committee charter gives the Audit Committee responsibilities and duties that include discussing with management, the internal audit department and the independent auditors our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. Our Nominating and Corporate Governance Committee’s responsibilities include reviewing and discussing with management the Company’s risk appetite and strategy relating to key risks as well as the reimbursementguidelines, policies and processes for monitoring and mitigating such risks. Our Compensation Committee is responsible for considering the impact of expensesour compensation policies and practices for all employees on our risk profile.

CORPORATE GOVERNANCE

Code of D.F. King & Co., Inc. will be borne by us. Our officers, directorsBusiness Conduct and employees may also solicit the returnEthics

We have adopted a code of proxies, either by mail, telephone, telecopy, e-mail or through personal contact. Thesebusiness conduct and ethics that applies to all of our employees, officers, and employees willdirectors, including those officers responsible for financial reporting. These standards are designed to deter wrongdoing and to promote honest and ethical conduct. The code of business conduct and ethics and the written charter for the audit committee, compensation committee and nominating and corporate governance committee are available on our website at www.adial.com. The information that appears on our website is not receive additional compensation for their efforts but will be reimbursed for out-of-pocket expenses. Brokerage housespart of, and other custodians, nomineesis not incorporated into, this proxy statement.

None of our directors or executive officers, nor any associate of such individual, is involved in a legal proceeding adverse to us.

If we make any substantive amendments to the code of business conduct and fiduciaries, in connection with sharesethics or grant any waiver from a provision of the Common Stock registered in their names,code to any executive officer or director, we will be requested to forward solicitation materialpromptly disclose the nature of the amendment or waiver on our website. We will promptly disclose on our website (i) the nature of any amendment to the beneficial ownerspolicy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of sharesany waiver, including an implicit waiver, from a provision of Common Stock.

Are there any other mattersthe policy that is granted to be acted upon atone of these specified individuals, the Special Meeting?

The only matters to be acted upon atname of such person who is granted the Special Meeting are the Reverse Stock Split Proposalwaiver and the Adjournment Proposal. No other matters will be acted upon at the Special Meeting.

Where can I find the voting resultsdate of the Special Meeting?waiver.

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 to be filed by usReview and Approval of Transactions with the SEC within four business days of the meeting.

Whom 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 1:

APPROVAL OF THE AMENDMENT

TO THE COMPANY’S CHARTER

TO EFFECT THE REVERSE STOCK SPLIT

Reasons for the Reverse Split Proposal

Related Persons

The Board is recommendingof Directors has adopted policies and procedures for review, approval and monitoring of transactions involving Adial and “related persons” (directors and executive officers or their immediate family members, or stockholders owning 5% or greater of the Company’s outstanding stock). The policy covers any related person transaction that meets the minimum threshold for disclosure in the proxy statement under the relevant rules of the SEC. Pursuant to our charter, our Audit Committee reviews on an on-going basis for potential conflicts of interest, and approve if appropriate, all our “Related Party Transactions.” For purposes of the Audit Committee Charter, “Related Party Transactions” means those transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.

A discussion of our current related person transactions appears in this proxy statement under “Transactions with Related Persons, Promoters and Certain Control Persons.”

Board and Committee Meetings and Attendance

During our fiscal year ended December 31, 2022, our Board of Directors held fifteen (15) meetings. During our fiscal year ended December 31, 2022, our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee met six (6) times, seven (7) times, and one (1) time, respectively. Each of our incumbent directors that were directors during our fiscal year ended December 31, 2022 attended no less than 75% of the meetings of the Board of Directors and Board committees on which such director served during 2022.

Board Attendance at Annual Stockholders’ Meeting

Our directors are encouraged, but not required, to attend the 2023 Annual Meeting. All seven of our directors who were directors at the time of our 2022 Annual Meeting of Stockholders attended our 2022 Annual Meeting of Stockholders.

Anti-Hedging/Anti-Pledging Policy

We have adopted an insider trading policy (the “Trading Policy”) with respect to the Company’s stockholders for their approval an amendment that would authorize, but not obligatepolicies and procedures covering trades of our securities and the Board,handling of our confidential information. The Trading Policy, which applies to amend the Company’s Certificateall officers, employees, directors, consultants and independent contractors of Incorporation to effect a reverse stock split of the outstanding and treasury shares of Common Stock at a ratio in the range of 1-for-2 to 1-for-50 (the “Reverse Stock Split”), which ratio would be subject to the Board’s discretion following stockholder approval. The Company believes that the availability of a range of reverse split ratios will provide the Company with the flexibility to implement the Reverse Stock Split, if effected at all, in a manner designed to maximize the anticipated benefits for the Company and its subsidiaries (each a “Covered Person”), prohibits the purchase or sale of our securities by a Covered Person, including their family members and others living in their household, who is in possession of material non-public information. The Trading

PROPOSAL 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has selected Marcum, LLP (“Marcum”), an independent registered accounting firm, to audit the books and financial records of the Company for the year ending December 31, 2022. Adial is asking its stockholders to ratify the appointment of Marcum, Adial’s independent registered public accounting firm, for fiscal year ending on December 31, 2023.

A representative of Marcum is expected to be present either in person or via teleconference at the 2023 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 Marcum 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 2023 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 interests of our stockholders.

Vote Required

The affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the 2023 Annual Meeting will be required to approve the ratification of the appointment of Adial’s registered public accounting firm. Abstentions will be counted and will have the same effect as a vote against the proposal. Because this is a routine matter for which brokers have discretion to vote if beneficial owners do not provide voting instructions, no broker non-votes are expected with respect to this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE SELECTION OF MARCUM LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING ON DECEMBER31, 2023.

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, 2022 with the management of Adial and Marcum, Adial’s independent registered public accounting firm. Further, the Audit Committee has discussed with Marcum the matters required to 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 Marcum required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, which relate to Marcum’s independence from Adial, and has discussed with Marcum 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 Marcum’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 rely 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, 2022 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, 2022, filed with the SEC. The Audit Committee has recommended, and the Board of Directors has approved, subject to stockholder ratification, the selection of Marcum as Adial’s independent registered public accounting firm for the year ending December 31, 2023.

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

____________

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.

Independent Registered Public Accounting Firm Fees and Services

Marcum serves as our independent registered public accounting firm. Friedman LLP was preceded by Marcum, which merged with Marcum.

Independent Registered Public Accounting Firm Fees and Services

The following table sets forth the aggregate fees including expenses billed to us for the years ended December 31, 2022 and 2021 by our auditors:

____________

(1)      Audit fees were for professional services rendered for the annual audit and reviews of the interim results included in the Form 10-Q’s 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 Reverse Stock Split Amendment set forth belowtime that the budget is submitted. Audit Committee approval is required to exceed the pre-approved amount for a summary onlyparticular 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 qualified in its entirety bybest positioned to provide the most effective and subjectefficient 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 full textAudit Committee at its next scheduled meeting. All of the formservices 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 380,000 TO 500,000

On October 9, 2017, the Board of proposed amendment which is attached as Annex A hereto.

The Board’s primary objective in asking for authority to effect a reverse split is to increaseDirectors adopted, and our stockholders approved on October 9, 2017, the per-share trading price of our Common Stock. If our Board doesAdial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 Equity Incentive Plan”); however, the 2017 Equity Incentive Plan did not implementbecome effective until the Reverse Stock Splitbusiness day prior to the one-year anniversarypublic trading of our common stock on the dateNasdaq. As of September 28, 2023, there were (i) 38,157 shares of common stock available for grant under the 2017 Equity Incentive Plan and (ii) 341,843 shares of common stock subject to awards were outstanding under the 2017 Equity Incentive Plan (all numbers have been adjusted to reflect the recent stock 1:25 reverse stock split that we effected on August 4, 2023).

Reasons for the Proposed Amendment

Equity-based compensation awards are a critical element of our overall compensation program. We believe that our long-term incentive compensation program aligns the interests of management, employees and the stockholders to create long-term stockholder value. 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 that 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 awards to the 2017 Equity Incentive Plan participants for the next 12 months and that it may be insufficient in order to allow us the ability to compete successfully for talented employees and consultants. The Board of Directors has approved, subject to stockholder approval, Amendment No. 5 to the 2017 Equity Incentive Plan, which amendment increases by 120,000 the Reverse Stock Splitnumber of shares that may be granted under the 2017 Equity Incentive Plan. The amendment to our 2017 Equity Incentive Plan will increase the number of shares of common stock with respect to which awards may be granted under the 2017 Equity Incentive Plan from 380,000 to 500,000. If the amendment to the 2017 Equity Incentive Plan is approved by our stockholders, at the Special Meeting, the authority granted in this proposal to implement the Reverse Stock Split will terminate and the Reverse Stock Split Amendment will be abandoned.

As background, we received notice on August 31, 2022 from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq notifying us of our noncompliance with Nasdaq Listing Rule 5550(a)(2) by failing to maintain a minimum bid price for our Common Stock on the Nasdaq of at least $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). We were given 180 days, or until February 27, 2023 to regain compliance; provided that the Nasdaq Staff retains discretion to grant an additional 180-calendar day grace period to determine that we have demonstrated an ability to maintain long-term compliance so long as we (i) meet the continued listing requirement for the market value of its publicly held shares and all other initial listing standards for Nasdaq, with the exception of the bid price requirement, and (ii) provide a written notice to the Staff of our intention to cure the deficiency during the second grace period by effecting a reverse stock split (which notice was provided by us to Nasdaq on February 14, 2023). In the event that we are unable to cure the deficiency, and ultimately receive notice that our Common Stock is being delisted, Nasdaq listing rules permit us to appeal the delisting determination by the Staff to a Nasdaq hearings panel. Accordingly, we are hereby asking our stockholders to approve a reverse split to, among other things, give us the option to seek to regain compliance with the Minimum Bid Price Requirement prior to expiration of the second compliance period.

The Board believes that the 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 Common Stock. If the Common Stock becomes significantly less liquid due to delisting from Nasdaq, our stockholders may not have the ability to liquidate their investments in the Common Stock as and when desired and we believe our ability to maintain analyst coverage, attractive investor interest, and have access to capital may become significantly diminished as a result.

In addition, we have limited a limited number of authorized shares issuable under our current Charter. Amendment of our Certificate of Incorporation to effect the Reverse Stock Split will increase the number of shares available for future issuance, facilitating future fundraising activities if necessary. A failureawards will increase to approve158,157 based on the Reverse Stock Split Proposal may limitnumber shares remaining available for grant under the 2017 Equity Incentive Plan as of September 28, 2023. The proposed Amendment No. 5 to the 2017 Equity Incentive Plan is attached hereto as Appendix A.

Purpose of the 2017 Equity Incentive Plan

The Board of Directors believes that the 2017 Equity Incentive Plan is necessary for us to attract, retain and motivate our employees, directors and consultants through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based or equity-related awards. The Company believes the 2017 Equity Incentive Plan is best designed to provide the proper incentives for our employees, directors and consultants, ensures our ability to raise capital throughmake performance-based awards, and meets the salerequirements of Common Stock.applicable law. Additional individuals may be awarded awards under the 2017 Equity Incentive Plan as consultants.

Potential EffectsWe manage our long-term stockholder dilution by limiting the number of the Amendment

Ifequity incentive awards granted annually. The Board of Directors monitors our annual stock award Burn Rate, Dilution and Overhang (each as defined below), among other factors, in its efforts to maximize stockholders’ value by granting what, in the Board decides to implement the Reverse Stock Split, the Company would communicate to the public, prior to the effective time of the Reverse Stock Split , additional details regarding the Reverse Stock Split (including the final Reverse Stock Split Ratio, as determined by the Board). By voting in favor of the Reverse Stock Split, youDirectors’ judgment, are also expressly 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:

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, effectingnumber of equity incentive awards necessary to attract, reward, and retain employees, consultants and directors. The table below illustrates our Burn Rate, Dilution, and Overhang for 2022, 2021 and 2020 with details of each calculation noted below the Reverse Stock Split, could, among other things, help ustable.

____________

(1)      Burn Rate is number of shares subject to appealequity awards granted during a fiscal year/weighted average shares outstanding for that fiscal year.

(2)      Dilution is (number of shares subject 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 believes 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 long-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 low-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 total 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 reducesequity awards + the number of shares available for future awards at the end of Common Stock available in the public market. If the Reverse Stock Split Amendment is approved and the Board believes that effecting the Reverse Split is in our best interest and the best interest of our stockholders, the Board may effect this Reverse Stock Split, regardless of whether 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 issuable under the Company’s charter. A Reverse Stock Split will reduce the nominal a fiscal year)/(number of shares outstanding at the end of Common Stock outstanding and the fiscal year + number of share subject to equity awards + number of shares available for future awards).

(3)      Overhang is (number of Common Stock issuable on exerciseshares subject to equity awards at the end of Company warrants or options, while leaving the a fiscal year)/(number of shares issuable under our Charter unchanged. A Reverse Stock split will therefor effectively increaseoutstanding at the end of the fiscal year + number of shares of the Common Stock that we are ablesubject to issue. This effective increase will facilitate future capital fundraising on our part. As a biotechnology company without a revenue generating product yet on the market and considerable development costs that must be funded to bring a product to market, we are likely to require additional capital funding. Some investors may find the Common Stock more attractive if the Reverse Stock Split is effected with additional assurance that we are unlikely to be limited in our ability to access needed capital by theequity awards + number of shares of our Common Sock authorized for issuance. However, other investors may find the Common Stock a less attractive investment with the knowledge that additional dilution of the Common Stock is possible.

Certain Risks Associated with a Reverse Stock Split

Reducing the number of outstanding shares of the Common Stock through the Reverse Split Proposal is intended, absent other factors, to increase the per share market price of the Common Stock. Other factors, however, such as our financial results, market conditions, the market perception of our business and other risks, including those set forth below and in our SEC filings and reports, may adversely affect the market price of the Common Stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of the Common Stock will increase following the reverse stock split or that the market price of the Common Stock will not decrease in the future.

The Reverse Stock Split May Not Result in a Sustained Increase in the Price of the Common Stock. As noted above, the principal purpose of the Reverse Split Proposal is to maintain the average per share market closing price of the Common Stock above $1.00 per share in order to comply with Minimum Bid Price Requirement under Nasdaq Listing Rules. However, the effect of the Reverse Stock Split upon the market price of the Common Stock cannot be predicted with any certainty and we cannot assure you that the Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all. The Board believes that a Reverse Stock Split has the potential to increase the market price of the Common Stock so that we may be able to satisfy the Minimum Bid Price Requirement. However, the long- and short-term effect of the Reverse Stock Split upon the market price of the Common Stock cannot be predicted with any certainty.

The Reverse Stock Split May Decrease the Liquidity of the Common Stock. The Board believes that the Reverse Stock Split may result in an increase in the market price of the Common Stock, which could lead to increased interest in the Common Stock and possibly promote greater liquidity for our stockholders. However, the Reverse Stock Split will also reduce the total number of outstanding shares of Common Stock, which may lead to reduced trading and a smaller number of market makers for the Common Stock.

The Reverse Stock Split May Result in Some Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell. If the Reverse Stock Split is implemented, it will increase the number of stockholders who own “odd lots” of less than 100 shares of Common Stock. A purchase or sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own less than 100 shares of Common Stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their Common Stock.

The Reverse Stock Split May Lead to a Decrease in the Overall Market Capitalization of the Company. The Reverse Stock Split may be viewed negatively by the market and, consequently, could lead to a decrease in our overall market capitalization. If the per share market price of the Common Stock does not increase in proportion to the Reverse Stock Split Ratio, then our value, as measured by our market capitalization, will be reduced.

The Reverse Stock Split May Lead to Further Dilution of the Common Stock. Since the Reverse Split Proposal would reduce the number of shares of Common Stock outstanding and the number of shares of Common Stock issuable on exercise of our warrants or options, while leaving the number of shares authorized and issuable under our Charter unchanged, Reverse Stock split would effectively increase the number of shares of the Common Stock that we would be able to issue and could lead to dilution of the Common Stock in future financings.

Impact of a Reverse Stock Split If Implemented

A Reverse Stock Split would affect all holders of Common Stock uniformly and would not affect any stockholder’s percentage ownership interests or proportionate voting power. The other principal effects of the Reverse Stock Split Amendment will be that:

The following table sets forth the approximate 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 fractional shares that will be paid in cash.

We are currently authorized to issue a maximum of 50,000,000 shares of our Common Stock. As of the Record Date, there were 28,516,564 shares of our Common Stock issued and outstanding. Although the number of authorized shares of our Common Stock will not change as a result of the Reverse Stock Split, the number of shares of our Common Stock issued and outstanding will be reduced in proportion to the ratio selected by the Board. Thus, the Reverse Stock Split will effectively increase the number of authorized and unissued shares of our Common Stock available for future issuance by the amount of the reduction effected by the Reverse Stock Split.awards).

Limitation on Awards and Shares Available

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 and outstanding rights to purchase Common Stock or to convert other securities into Common Stock the proposed Reverse Stock Split will not alter the relative rights and preferences of existing stockholders, except to the extent the Reverse Stock Split will result in fractional shares, as discussed in more detail below.

The Common Stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect the registration of the Common Stock under the Exchange Act or the listing of the Common Stock on Nasdaq (other than to the extent it facilitates compliance with Nasdaq continued listing standards). Following the Reverse Stock Split, the Common Stock will continue to be listed on Nasdaq, although it will be considered a new listing with a new Committee on Uniform Securities Identification Procedures, or CUSIP, number.

The rights of the holders of the Common Stock will not be affected by the Reverse Stock Split, other than as a result of the treatment of fractional shares as described below. For example, a holder of 2% of the voting power of the outstanding shares of the Common Stock immediately prior to the effectiveness of the Reverse Stock Split Amendment will generally continue to hold 2% of the voting power of the outstanding shares of the Common Stock immediately after effecting the Reverse Stock Split. The number of stockholders of record will not be affected by the Reverse Stock Split (except to the extent any are cashed out as a result of holding fractional shares). If approved and implemented, the Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of the Common Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally higher than the costs of transactions in “round lots” of even multiples of 100 shares. The Board believes, however, that these potential effects are outweighed by the benefits of the Reverse Stock Split.

Effectiveness of the Reverse Stock Split. The Reverse Stock Split, if approved by our stockholders, would become effective upon the filing and effectiveness (the “Effective Time”) of an amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware, which would take place at the Board’s discretion. The exact timing of the filing of the amendment to our Certificate of Incorporation, if filed, would be determined by the Board based on its evaluation as to when such action would be the most advantageous to us and our stockholders. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split at any time prior to filing the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware, the Board, in its sole discretion, determines that it is no longer in our best interests or the best interests of our stockholders to proceed with the Reverse Stock Split. If our Board does not implement the Reverse Stock Split prior to the one-year anniversary of the date on which the Reverse Stock Split is approved by our stockholders at the Special Meeting, the authority granted in this proposal to implement the Reverse Stock Split will terminate and the Reverse Stock Split will be abandoned.

Effect on Par Value; Reduction in Stated Capital. The proposed Reverse Stock Split will not affect the par value of our stock, which will remain at $0.001 per share of Common Stock and $0.001 per share of Preferred Stock. As a result, the stated capital on our balance sheet attributable to our Common Stock, which consists of the par value per share of Common Stock multiplied byInitially, the aggregate number of shares of Common Stockour common stock that was available to be issued pursuant to stock awards under the 2017 Equity Incentive Plan was 70,000 shares, which was increased to 140,000 shares in 2019, 220,000 on July 30, 2020, 300,000 on August 18, 2021 and 380,000 on September 1, 2022 (all numbers have been adjusted to reflect the recent stock 1:25 reverse stock split that we effected on August 4, 2023). At September 28, 2023, we had outstanding options to purchase an aggregate of 203,312 shares of our common stock and had issued 138,531 shares of common stock under the 2017 Equity Incentive Plan. As of September 28, 2023, there are 38,157 shares of our common stock available for grants that may be made under the 2017 Equity Incentive Plan.

Summary of the 2017 Equity Incentive Plan

The principal provisions of the 2017 Equity Incentive Plan are summarized below.

Administration

The 2017 Equity Incentive Plan generally is administered by our Compensation Committee, which has been appointed by the Board of Directors to administer the 2017 Equity Incentive Plan. The Compensation Committee will have full authority to establish rules and regulations for the proper administration of the 2017 Equity Incentive Plan, to select the employees, directors and consultants to whom awards are granted, and to set the date of grant, the type of award and the other terms and conditions of the awards, consistent with the terms of the 2017 Equity Incentive Plan.

Eligibility

Persons eligible to participate in the 2017 Equity Incentive Plan include all of our officers, employees, directors and consultants.

Awards

The 2017 Equity Incentive Plan provides for the grant of: (i) incentive stock options; (ii) nonstatutory stock options; (iii) stock appreciation rights; (iv) restricted stock; and (v) other stock-based and cash-based awards to eligible individuals. The terms of the awards will be reducedset forth in proportion toan award agreement, consistent with the Reverse Stock Split Ratio selected by the Board. Correspondingly, our additional paid-in capital account, which consiststerms 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,2017 Equity Incentive Plan. No stock option 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 hold 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 proceduresexercisable later 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.

Fractional Shares. We do not intend to issue fractional shares in connection with the Reverse Stock Split. and, in lieu thereof, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the reclassification and combination following the Effective Time (after taking into account all fractional shares of Common Stock otherwise issuable to such holder) shall be entitled to receive a cash payment equal to the number of shares of the Common Stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional share interest multiplied by the average closing sales price of the Common Stock as reported on the Nasdaq for the ten days preceding the Effective Time. After the Reverse Stock Split is effected, a stockholder will have no further interest in our company with respect to its fractional share interest and persons otherwise entitled to a fractional share will not have any voting, dividend or other rights with respect thereto, except to receive the above-described cash payment. Stockholders should be aware that under the escheat laws of various jurisdictions, sums due for fractional interests that are not timely claimedyears after the Effective Time may be required to be paid to the designated agent for each such jurisdiction. Stockholders otherwise entitled to receive such funds, who have not received them, will have to seek to obtain such funds directly from the jurisdiction to which they were paid.

Material U.S. Federal Income Tax Considerations Related to the Reverse Stock Split

date it is granted.

The following is a general summary2017 Equity Incentive Plan permits the grant of the material U.S. federal income tax considerationsawards intended to U.S. holders (as defined below) of the Reverse Stock Split. This discussion is based upon current provisionsqualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations promulgated underamended.

Stock Options

The Compensation Committee may grant incentive stock options as defined in Section 422 of the Code, (the “Treasury Regulations”) and judicial authoritynonstatutory stock options. Options shall be exercisable for such prices, shall expire at such times, and administrative interpretations,shall have such other terms and conditions as the Compensation Committee may determine at the time of grant and as set forth in the award agreement; however, the exercise price must be at least equal to 100% of the fair market value at the date of grant. The option price is payable in cash or other consideration acceptable to us. On September 28, 2023, the closing price of our Common Stock on the Nasdaq was $2.58.

Stock Appreciation Rights

The Compensation Committee may grant stock appreciation rights with such terms and conditions as the Compensation Committee may determine at the time of grant and as set forth in the award agreement. The grant price of a stock appreciation right shall be determined by the Compensation Committee and shall be specified in the award agreement; however, the grant price must be at least equal to 100% of the fair market value of a share on the date of grant. Stock appreciation rights may be exercised upon such terms and conditions as are imposed by the Compensation Committee and as set forth in the stock appreciation right award agreement.

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 provided 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 document,proxy statement, associated with the grant of awards under the 2017 Equity Incentive Plan. This summary is based on our understanding of present United States federal income tax law and all of which are subjectregulations. The summary does not purport to change, possibly with retroactive effect, and are subjectbe complete or applicable to differing interpretations. Changes in these authorities may causeevery specific situation. Furthermore, the tax consequences to vary substantially from the consequences described below. We have not sought and will not seek an opinion of counsel or any rulings from the 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 discussion is limited to U.S. holders that hold Common Stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). Thisfollowing discussion does not address anyforeign, state or local 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 non-U.S. jurisdiction, U.S. federal estate or gift tax laws, 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.consequences.

Options

Grant.    There is generally no United States federal income tax laws, including, without limitation: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.

If a partnership, or any entity (or arrangement) treated as a partnershiptaxable event for U.S.regular federal income tax purposes holds Common Stock,if certain requirements are satisfied, including the requirement that the participant generally must exercise the incentive stock option no later than three months following the termination of the participant’s employment with us. However, such exercise may give rise to alternative minimum tax treatmentliability (see “Alternative Minimum Tax” below). Upon the exercise of a partnernonqualified stock option, the participant will generally recognize ordinary income in such partnershipan amount equal to the excess of the fair market value of the shares at the time of exercise over the amount paid by the participant as the exercise price. The ordinary income recognized in connection with the exercise by a participant of a nonqualified stock option will be subject to both wage and employment tax withholding, and we generally will depend on the status of the partner and the activities of the partnership and upon certain determinations made at the partner level. Partnerships holding Common Stock and partners in such partnerships should consult their own tax advisors about the U.S. federal income tax consequences of the Reverse Stock Split.

For purposes of this discussion,be entitled to a “U.S. holder” is a beneficial owner of shares of Common Stock that is for U.S. federal income tax purposes:corresponding deduction.

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 value on the date of exercise over the stock appreciation rights’ base price, or the amount payable. Generally, with respect to employees, the Company is required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject 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 entitled 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 award 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 claimed as a deduction for federal income tax purposes by us. Upon disposition of the shares received, the gain or loss recognized by the participant will be treated as having received a distribution thatcapital gain or loss, and the capital gain or loss will be treated firstshort-term or long-term depending upon whether the participant held the shares for more than one year following the vesting or cessation of the substantial risk of forfeiture.

However, by filing a Section 83(b) election with the Internal Revenue Service within 30 days after the date of grant, a participant’s ordinary income and commencement of holding period and the deduction will be determined as dividendof the date of grant. In such a case, the amount of ordinary income recognized by such a participant and deductible by us will be equal to the extentexcess of the fair market value of the award as of the date of grant over the amount paid, out of our currentif any, by the participant for the award. If such election is made and a participant thereafter forfeits his or accumulated earnings and profits, and then as a tax-free return of capitalher award, no refund or deduction will be allowed for the amount previously included in such participant’s income.

Generally, with respect to employees, we are required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the extentrequirement of reasonableness, the provisions of Section 162(m) of the U.S. Holder’sCode the satisfaction of a tax basisreporting obligation and any tax withholding condition, we generally will be entitled to a business expense deduction equal to the taxable ordinary income realized by the recipient. Upon disposition of stock, the recipient will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock, if any, plus any amount recognized as ordinary income upon acquisition (or vesting) of the stock. Such gain or loss will be long- or short-term depending on whether the stock was held for more than one year from the date ordinary income is measured.

Section 409A

If an award under the 2017 Plan is subject to Section 409A of the Code, but does not comply with the requirements of Section 409A of the Code, the taxable events as described above could apply earlier than described, and could result in our common stock,the imposition of additional taxes and penalties. Participants are urged to consult with any remaining amount being treated as capital gain. U.S. holders should consult their tax advisors regarding the applicability of Section 409A of the Code to their awards.

Potential Limitation on Company Deductions

Section 162(m) of the Code generally disallows a tax effects to themdeduction for compensation in excess of receiving cash$1 million paid in lieu of fractional shares based on their particular circumstances.

Information Reporting and Backup Withholding

Cash payments receiveda taxable year by a U.S. holderpublicly held corporation to its chief executive officer and certain other “covered employees”. Our Board of Common Stock pursuantDirectors and Compensation Committee intend to consider the Reverse Stock Split maypotential impact of Section 162(m) on grants made under the 2017 Equity Incentive Plan, but reserve the right to approve grants of options and other awards for an executive officer that exceeds the deduction limit of Section 162(m).

New Plan Benefits

Any awards to be made under the 2017 Equity Incentive Plan will be subject to information reportingthe discretion of our Compensation Committee. As a result, as of the date of this proxy statement, we are unable to determine any specific grants of awards under the 2017 Equity Incentive Plan that will be made. Since it is not possible to determine the exact number of awards that will be granted under the 2017 Equity Incentive Plan, the awards granted during fiscal 2022 under the 2017 Equity Incentive Plan are set forth in the following table.

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(1)      Option to purchase 2,000 shares of common stock were cancelled on Mr. Stilley’s resignation on September 18, 2023.

Interests of Directors and Executive Officers

Our directors and executive officers have substantial interests in the matters set forth in this proposal since equity awards may be subjectgranted to U.S. backup withholding (currently at 24%) unless such holderthem under the 2017 Equity Incentive Plan.

Market Price of Shares

The closing price of our common stock, as reported on Nasdaq on September 28, 2023, was $2.58.

Equity Compensation Plan Information

On October 9, 2017, we adopted the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan; which became effective on July 31, 2018. The following table provides proofinformation, as of an applicable exemption or a correct taxpayer identification number and otherwise compliesDecember 31, 2022 with the applicable requirementsrespect to options outstanding under our 2017 Equity Incentive Plan.

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*        Excludes 5,584 options issued prior to adoption of the backup withholding rules. Any amount withheldEquity Compensation Plan and 89,933 shares of common stock issued under the U.S. backup withholding rules is not an additional tax and will generally be allowed as a refund or credit against the U.S. holder’s U.S. federal income tax liability provided that the required information is timely furnished to the IRS.Equity Compensation Plan.

Vote Required Vote

The affirmative vote of holders of a majority of the shares of our issued and outstanding Common Stock on the Record Date is required for approval of the Reverse Stock Split Proposal. Each of the failure to vote by proxy or to vote in person and a broker non-vote will have the effect of a vote against the Reverse Stock Split Proposal. An abstention will have the same practical effect as a vote against this proposal. As described above, we expect that the Reverse Stock Split 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 instruct your broker, bank or other nominee on how to vote your shares will not necessarily count as a vote against this proposal.

Board Recommendation

Our Board recommends a vote “FOR” the approval of the Reverse Stock Split Proposal.

PROPOSAL 2:

APPROVAL OF THE ADJOURNMENT PROPOSAL

Background of and Rationale for the Adjournment Proposal

The Board believes that if the number of shares of our Common Stock outstanding and entitled to vote at the Special Meeting is insufficient to approve the Reverse Stock Split, it is in the best interests of the stockholders to enable the Board to continue to seek to obtain a sufficient number of additional votes to approve the Reverse Stock Split Proposal.

In the Adjournment Proposal, we are asking stockholders to authorize the holder of any proxy solicited by the Board to vote in favor of adjourning or postponing the Special Meeting or any adjournment or postponement thereof. If our stockholders approve this proposal, we could adjourn or postpone the Special Meeting, and any adjourned session of the Special Meeting, to use the additional time to solicit additional proxies in favor of the Reverse Stock Split Proposal.

Additionally, approval of the Adjournment Proposal could mean that, in the event we receive proxies indicating that a majority of the number of outstanding shares of our Common Stock will vote against the Reverse Stock Split Proposal, we could adjourn or postpone the Special Meeting without a vote on the Reverse Stock Split and use the additional time to solicit the holders of those shares to change their vote in favor of the Reverse Stock Split Proposal.

Vote Required

The affirmative “FOR” vote of a majority of the shares of Common Stock present in person or represented by proxy at the Special Meeting and entitled to vote on this proposal ismatter at the 2023 Annual Meeting will be required to approve this proposal. Each of the failureamendment to our 2017 Equity Incentive Plan. Abstentions will be counted and will have the same effect as a vote by proxy or to vote in personagainst the proposal and a broker non-vote-non-votes, if any, are not votes cast and not votes present at the meeting and therefore will have no effect on the Adjournment Proposal. An abstention will haveoutcome of this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENT TO OUR 2017 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE THAT WE WILL HAVE AUTHORITY TO GRANT.

EXECUTIVE OFFICERS

Set forth below are the same practical effectexecutive officers of the Company who do not serve as directors, including their ages, their positions with our company and a brief biographical description.

Bankole A. Johnson, D.Sc., M.D., Chief Medical Officer

Bankole Johnson has served as our Chief Medical Officer since March 24, 2019. Dr. Johnson also served as the Chairman of our Board from November 2010 until March 24, 2019. Dr. Johnson is a world-leading neuroscientist and a pioneer in the development of medications for the treatment of alcohol abuse and is the inventor of all patents covering AD04. In August 2013, he was appointed Chairman of the Department of Psychiatry at the University of Maryland School of Medicine and also leads the Brain Science Research Consortium Unit at the University of Maryland, a position he held until March 2019 to devote greater focus to his new duties with us. Previously, from 2004 until August 2013, he served as Alumni Professor and Chairman of the Department of Psychiatry and Neurobehavioral Sciences at the University of Virginia.

Dr. Johnson graduated in Medicine from Glasgow University in 1982 and trained in Psychiatry at the Royal London and Maudsley and Bethlem Royal Hospitals. Additional to his medical degree, he trained in research at the Institute of Psychiatry (University of London) and conducted studies in neuropsychopharmacology for his doctoral thesis (degree from Glasgow University) on the Medical Research Council unit at Oxford University. In 2004, Dr. Johnson earned his Doctor of Science degree in Medicine from Glasgow University — the highest degree that can be granted in science by a British university. His primary area of research expertise is the psychopharmacology of medications for treating addictions.

Dr. Johnson is a licensed physician and board-certified psychiatrist throughout Europe and in the U.S. He is the Principal Investigator on National Institutes of Health (NIH)-funded research studies utilizing neuroimaging, neuropharmacology, and molecular genetics techniques. Dr. Johnson’s clinical expertise is in the fields of addiction, biological, and forensic psychiatry. Honors include service on numerous NIH review and other committees including special panels.

Dr. Johnson was the 2001 recipient of the Dan Anderson Research Award for his “distinguished contribution as a vote against this proposal. As described above, we expect thatresearcher who has advanced the Adjournment Proposal is considered a “routine” matter. Therefore, your broker, bank or other nominee may vote your shares without receiving instructionsscientific knowledge of addiction recovery.” He received the Distinguished Senior Scholar of Distinction Award in 2002 from you on this proposalthe National Medical Association. Dr. Johnson also was an inductee of the Texas Hall of Fame in 2003 for contributions to science, mathematics, and accordingly, we do not expect any broker non-votes on this proposal. A failure to instruct your broker, bank or other nominee on how to vote your shares will not necessarily counttechnology, and in 2006 he received the American Psychiatric Association’s (APA’s) Distinguished Psychiatrist Lecturer Award. In 2007, he was named as a vote against this proposal.Fellow in the Royal College of Psychiatrists, and in 2008 he was elected to the status of Distinguished Fellow of the APA. In 2009, he received the APA’s Solomon Carter Fuller Award, honoring an individual who has pioneered in an area that has benefited significantly the quality of life for Black people. In 2010, he was named as a Fellow in the American College of Neuropsychopharmacology. Dr. Johnson is Field Editor-in-Chief of Frontiers in Psychiatry, serves on the Editorial Board of The American Journal of Psychiatry, and reviews for over 30 journals in pharmacology, neuroscience, and the addictions. He has over 200 publications. Dr. Johnson also has edited three books: Drug Addiction and Its Treatment: Nexus of Neuroscience and Behavior, Handbook of Clinical Alcoholism Treatment, and Addiction Medicine: Science and Practice, one of the foremost reference textbooks in the field.

Dr. Johnson has served as a consultant to Johnson & Johnson (Ortho-McNeil Janssen Scientific Affairs, LLC), Transcept Pharmaceuticals, Inc., D&A Pharma, Organon, Adial Corporation, Psychological Education Publishing Company (PEPCo LLC), and Eli Lilly and Company. He also has served on the Extramural Advisory Board for NIAAA (2004-present), the National Advisory Council for NIDA (2004-2007), the Medications Development Subcommittee of NIDA’s Advisory Council on Drug Abuse (2004-2007), and the Medications Development Scientific Advisory Board for NIDA (2005-2009). In addition, he has been the recipient of research grant support from both NIAAA and NIDA.

Joseph Truluck, Chief Financial Officer, Treasurer, and Secretary

Board RecommendationJoseph Truluck has served as our Chief Financial Officer since June 2017 and our Treasurer and served as our Secretary from October 2017 until September 27, 2021, and from May 2016 until his appointment as our Chief Operating Officer, as our VP Operations and Finance. From January 2013 to December of 2019, Mr. Truluck served as the VP Operations and Finance at Adenosine Therapeutics, LLC after the company reacquired its major drug development program. As VP Operations and Finance, at Adenosine Therapeutics, Mr. Truluck oversaw the operations of the business, including seeing to completion a project to merge and analyze two partially completed Phase 3 trials to constitute a single trial. From April 2005 to July 2009, Mr. Truluck served as the Operations Manager of Adenosine Therapeutics’ until its purchase in August 2008 by Clinical Data. After the purchase of Adenosine Therapeutics’ operations by Clinical Data, Mr. Truluck went on to gain an MBA from Tulane University with a concentration in Finance. In addition to his MBA at Tulane, Mr. Truluck earned an MA in Philosophy at the University of Virginia, with a thesis in the philosophy of language.

EXECUTIVE COMPENSATION

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Summary Compensation Table

The following table sets forth the information as to compensation paid to or earned by our executive officers during the years ended December 31, 2022 and 2021 whose total compensation did exceed $100,000. The persons listed in the following table are referred to herein as the “named executive officers.”

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(1)      According to the terms of Mr. Claiborne’s executive agreement, he is eligible to receive a bonus of 40% of his base salary for service as CEO during 2022. The Company has accordingly recognized $180,000 in accrued expenses associated with Mr. Claiborne’s service for the year ended December 31, 2022. However, at the date of this filing, no bonus for 2022 has been paid and the amount of any such bonus to be paid in the future remains at the discretion of the Board of Directors.

(2)      Includes the value of 40,000 shares issued on August 18, 2022 on accession as CEO with a market value on issue of $14.75 per share. Also includes the fair value of 267 options to purchase shares of common stock at an exercise price of $40.75 per share issued for service as a director on November 2, 2021 at a fair value of $63.25 per option. All options vest over a three-year period from grant date. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(3)      Includes (i) the payment of $20,433 of medical and dental insurance premiums, (ii) $12,200 of matched 401(k) contributions, $24,913 cash fee for services as a Director, and (iv) $808 of reimbursed telephone expenses.

(4)      Mr. Claiborne began his service as COO on December 8, 2021.

(5)      Includes the fair value of 2,400 options to purchase shares of common stock at an exercise price of $78.75 per share issued for service as a director on November 2, 2021 at a fair value of $63.25 per option and 5,200 options to purchase shares of common stock at an exercise price of $66.00 per share issued on December 7, 2021 at a fair value of $57.00 per option. All options vest over a three-year period from grant date. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(6)      All other compensation for Mr. Claiborne is comprised of cash fee for services as a Director of $3,913.

(7)      According to the terms of Mr. Truluck’s executive agreement, he is eligible to receive a bonus of 25% of his base salary for service as CEO during 2022. The Company has accordingly recognized $67,500 in accrued expenses associated with Mr. Truluck’s service for the year ended December 31, 2022. However, at the date of this filing, no bonus for 2022 has been paid and the amount of any such bonus to be paid in the future remains at the discretion of the Board of Directors.

(8)      Includes the fair value of 4,000 options to purchase shares of common stock at an exercise price of $78.75 per share issued on February 23, 2022 at a fair value of $40.75 per option. Options vest over a three-year period from grant date. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(9)      Comprised of $12,200 in matched 401(k) contributions.

(10)    Consisting of a cash performance bonus payment of $45,500 fully earned in 2021 and paid in 2022.

(11)    Represents the fair value of 5,000 options to purchase shares of common stock at an exercise price of $77.75 per share issued on February 8, 2021 at a fair value of approximately $63.25 per option. Options vest over a three-year period from grant date. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(12)    Comprised of $13,839 in matched 401(k) contributions.

(13)    According to the terms of Mr. Stilley’s executive agreement, he was eligible to receive a bonus of 40% of his base salary for service as CEO during 2022. The Company has accordingly recognized $90,000 in accrued expenses associated with Mr. Stilley’s service for the year ended December 31, 2022. As of the date of his resignation, no bonus for 2022 had been paid, nor will any such bonus be paid.

(14)    Includes the value of 3,333 shares issued on February 23, 2022 with a market value on issue of $50.00 per share as a discretionary bonus. An additional 6,667 shares were originally granted on the same day at the same value per share but were cancelled on December 30, 2022 at Mr. Stilley’s will. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(15)    Includes (i) the payment of $24,700 of medical and dental insurance premiums and HSA contributions, (ii) $8,702 of matched 401(k) contributions, $27,000 cash fee for services as a Director, and (iv) $897 of reimbursed telephone expenses.

(16)    Bonuses for Mr. Stilley were comprised of cash performance bonus payment of $114,800 earned in 2021 and paid in 2022.

(17)    Includes the fair value of 10,000 options to purchase shares of common stock at an exercise price of $77.75 per share issued on February 8, 2021 at a fair value of $63.25 per option. Options vest over a three-year period from grant date. Fair value computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023.

(18)    All other compensation for Mr. Stilley is comprised of (i) a contribution by our company to an HSA ($8,004); (ii) the payment by our company of insurance premiums including life, dental, vision ($28,245); (iii) matched 401(k) contributions ($11,187); and (iv) cash fee for services as a Director ($24,000).

(19)    Mr. Stilley served as our Chief Executive Officer until August 18, 2022 when he served as our Executive Vice President and the Chief Executive Officer of Purnovate, Inc. On September 18, 2023, Mr. Stilley resigned from all positions he held with us including as a member of our Board of Directors and Executive Vice President as well as Chief Executive Officer of our subsidiary.

Outstanding Equity Awards at Fiscal Year-End (December 31, 2022)

The following table provides information about the number of outstanding equity awards held by each of our named executive officers as of December 31, 2022:

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(1)      One thirty-sixth (1/36) of these options vested on the date of grant, November 2, 2021, with an additional one thirty-sixth vesting on the first day of each subsequent month.

(2)      One thirty-sixth (1/36) of these options vested on the date of grant, December 7, 2021, with an additional one thirty-sixth vesting on the first day of each subsequent month.

(3)      One thirty-sixth (1/36) of these options vested on the date of grant, February 23, 2022, with an additional one thirty-sixth vesting on the first day of each subsequent month.

(4)      One thirty-sixth (1/36) of these options vested on the date of grant, June 30, 2017, with an additional one thirty-sixth vesting on the first day of each subsequent month. At the date of this filing, these grants are fully vested.

(5)      One thirty-sixth (1/36) of these options vested on the date of grant, March 9, 2019, with an additional one thirty-sixth vesting on the first day of each subsequent month. At the date of this filing, these grants are fully vested.

(6)      One thirty-sixth (1/36) of these options vested on the date of grant, March 3, 2020, with an additional one thirty-sixth vesting on the first day of each subsequent month.

(7)      One thirty-sixth (1/36) of these options vested on the date of grant, February 8, 2021, with an additional one thirty-sixth vesting on the first day of each subsequent month.

(8)      One thirty-sixth (1/36) of these options vested on the date of grant, June 30, 2017, with an additional one thirty-sixth vesting on the first day of each subsequent month. At the date of this filing, this grant was fully vested. Any options unexercised at December 17, 2023, which is 90 days from the date of Mr. Stilley’s resignation, will be cancelled.

(9)      One thirty-sixth (1/36) of these options vested on the date of grant, March 9, 2019, with an additional one thirty-sixth vesting on the first day of each subsequent month. At the date of this filing, this grant was fully vested. Any options unexercised at December 17, 2023, which is 90 days from the date of Mr. Stilley’s resignation, will be cancelled.

(10)    One thirty-sixth (1/36) of these options vested on the date of grant, March 3, 2020, with an additional one thirty-sixth vesting on the first day of each subsequent month. At the date of this filing, this grants was fully vested. Any options unexercised at December 17, 2023, which is 90 days from the date of Mr. Stilley’s resignation, will be cancelled.

(11)    One thirty-sixth (1/36) of these options vested on the date of grant, February 8, 2021, with an additional one thirty-sixth vesting on the first day of each subsequent month. On September 18, 2023, the date of Mr. Stilley’s resignation, 1,111 unvested options were cancelled. The remaining 8,889 options will be cancelled if they are unexercised on December 17, 2023, which is 90 days from the date of Mr. Stilley’s resignation.

Employment Agreements and Consulting Agreement

Employment Agreements

We are currently a party to employment agreements with each of Messrs. Claiborne and Truluck.

In connection with the appointment of Mr. Claiborne as Chief Operating Officer of the Company, we and Mr. Claiborne entered into a three-year employment agreement (the “Claiborne Employment Agreement”). Pursuant to the terms of the Claiborne Employment Agreement, Mr. Claiborne received an annual base salary of $304,000, had a target bonus opportunity equal to 25% of his base salary and devoted no less than 80% of his business time to the affairs of the Company. On August 22, 2022, Mr. Claiborne was appointed Chief Executive Officer by the Board of Directors, at which time his employment agreement was amended to increase his annual base salary to $450,000 with a target bonus opportunity of 40% of his annual salary. Mr. Claiborne agreed to devote substantially all his business time to the affairs of the Company. On execution of this agreement, Mr. Claiborne was also granted one million shares of common stock, said shares vesting monthly over a three year period. Mr. Claiborne’s annual salary is subject to increase at the discretion of the Board. The Board may, in its discretion, pay a portion of Mr. Claiborne’s annual bonus in the form of cash or equity or equity-based awards (or any combination thereof). Mr. Claiborne is also subject to certain restrictive covenants, including a non-competition (applicable during employment and for 24 months thereafter), customer non-solicitation and employee and independent contractor non-solicitation (each applicable during employment and for 12 months thereafter), as well as confidentiality (applicable during employment and 7 years thereafter) and non-disparagement restrictions (applicable during employment and at all times thereafter).

Effective upon the closing of the initial public offering, we entered into a three-year employment agreement with Joseph Truluck to serve as our Chief Operating Officer and Chief Financial Officer (the “Truluck EA”), which agreement was amended on February 12, 2021 to extend the term of the agreement to March 31, 2026. Under the Truluck EA, Mr. Truluck devotes no less than 50% of his business time to the affairs of our company, which was increased to 75% on February 12, 2021. Pursuant to the terms of the Truluck EA, as amended on March 10, 2019 to increase his salary to $150,000 per annum and further amended on March 3, 2020 to increase his salary to ($170,000 per annum) and further amended on February 23, 2022, he receives an annual salary of $270,000 and has a target bonus opportunity equal 25% of his salary. Mr. Truluck’s annual salary is subject to increase at the discretion of our Board of Directors. Our Board of Directors may, in its discretion, pay a portion of Mr. Truluck’s annual bonus in the form of equity or equity-based compensation. Mr. Truluck is also subject to certain restrictive covenants, including a non-competition (applicable during employment and for 24 months thereafter), customer non-solicitation and employee and independent contractor non-solicitation (each applicable during employment and for 12 months thereafter), as well as confidentiality (applicable during employment and 7 years thereafter) and non-disparagement restrictions (applicable during employment and at all times thereafter).

Effective upon the closing of our initial public offering, we entered into a five-year employment agreement with Mr. Stilley to serve as our Chief Executive Officer, which agreement was amended on February 12, 2021 to extend the term of the agreement to March 31, 2026 (the “Stilley EA”). Under the Stilley EA, as amended on March 10, 2019 to increase his salary to $400,000 and further amended on February 12, 2021 and March 17, 2021, Mr. Stilley received an annual salary of $410,000 and had a target bonus opportunity equal to 40% of his salary. Mr. Stilley’s annual salary was subject to increase at the discretion of our Board of Directors. On August 22, 2022, Mr. Stilley was appointed by the Board of Directors to be Chief Executive Officer of the Company’s wholly-owned subsidiary, Purnovate, Inc. and on August 31, 2022, he was appointed as our Executive Vice President. At that time, his employment agreement was amended to make his annual salary equal to $260,000, which was to be increased to $430,000 at such time as Purnovate’s cash on hand is equal to three million dollars or more. Our Board of Directors could have, in its discretion, paid a portion of Mr. Stilley’s annual bonus in the form of equity or equity-based compensation, provided that commencing with the year following the year in which a Change of Control (as defined in the Stilley EA) occurs, Mr. Stilley’s annual bonus would be paid in cash. Mr. Stilley is also subject to certain restrictive covenants, including a non-competition (applicable during employment and for 24 months thereafter), customer non-solicitation and employee and independent contractor non-solicitation (each applicable during employment and for 12 months

thereafter), as well as confidentiality (applicable during employment and 7 years thereafter) and non-disparagement restrictions (applicable during employment and at all times thereafter). Mr. Stilley resigned from all positions he held with the Company and our subsidiaries on September 18, 2023.

In the event that Mr. Claiborne’s or Mr. Truluck’s (each an “Executive”) employment is terminated by us other than for Cause, or upon his resignation for Good Reason (as such terms are defined in the Employment Agreement), the Executive will be entitled to any unpaid bonus earned in the year prior to the termination, a pro-rata portion of the bonus earned during the year of termination, continuation of base salary for 12 months in the case of Mr. Claiborne, 6 months in the case of Mr. Truluck, plus 12 months of COBRA premium reimbursement. If Mr. Claiborne’s termination occurs within 60 days before or within 24 months following a Change of Control, then Mr. Claiborne will be entitled to receive the same severance benefits as provided above except he will receive (a) a payment equal to two times the sum of his base salary and the higher of his target annual bonus opportunity and the bonus payment he received for the year immediately preceding the year in which the termination occurred instead of 12 months of base salary continuation and (b) 24 times the monthly COBRA premium for himself and his eligible dependents instead of 12 months of COBRA reimbursements (the payments in clauses (a) and (b) are paid in a lump sum in some cases and partly in a lump sum and partly in installments over 12 months in other cases). In addition, if Mr. Claiborne’s employment is terminated by us without Cause or by the him for Good Reason, in either case, upon or within 24 months following a Change of Control, then he will be entitled to full vesting of all equity awards received by him from us (with any equity awards that are subject to the satisfaction of performance goals deemed earned at not less than target performance).

In the event that the Executive’s employment is terminated due to his death or Disability, the Executive (or his estate) will be entitled to any unpaid bonus earned in the year prior to the termination, a pro-rata portion of the bonus earned during the year of termination, 12 months of COBRA premium reimbursement and accelerated vesting of (a) all equity awards received in payment of base salary or an annual bonus and (b) with respect to any other equity award, the greater of the portion of the unvested equity award that would have become vested within 12 months after the termination date had no termination occurred and the portion of the unvested equity award that is subject to accelerated vesting (if any) upon such termination under the applicable equity plan or award agreement (with performance goals deemed earned at not less than target performance, and with any equity award that is in the form of a stock option or stock appreciation right to remain outstanding and exercisable for 12 months following the termination date or, if longer, such period as provided under the applicable equity plan or award agreement (but in no event beyond the expiration date of the applicable option or stock appreciation right).

All severance payments to the Executives will be subject to the execution and non-revocation of a release of claims by the Executive or his estate, as applicable.

For purpose of each of the Claiborne EA and Truluck EA, “Good Reason” is defined as the occurrence of any of the following events without the respective Executive’s consent: (i) a material reduction in the Executive’s duties, responsibilities or authority; (ii) a reduction of the Executive’s base salary; (iii) failure or refusal of a successor to us to either materially assume our obligations under the employment agreement or enter into a new employment agreement with the Executive on terms that are materially similar to those provided under this Agreement, in any case, in the event of a Change of Control; (iv) relocation of the Executive’s primary work location that results in an increase in the Executive’s one-way driving distance by more than twenty-five (25) miles from the Executive’s then-current principal residence; or (v) a material breach of the employment agreement by us.

For purposes of the Claiborne EA and Truluck EA, “Cause” is defined as that the Executive shall have engaged in any of the following acts or that any of the following events shall have occurred, all as determined by the Board of Directors in its sole and absolute discretion: (i) conviction for, or entering of a plea of guilty or nolo contendere (or its equivalent under any applicable legal system) with respect to (A) a felony or (B) any crime involving moral turpitude; (ii) commission of fraud, misrepresentation, embezzlement or theft against any person; (iii) engaging in any intentional activity that injures or would reasonably be expected to injure (monetarily or otherwise), in any material respect, the reputation, the business or a business relationship of the Company or any of its affiliates; (iv) gross negligence or willful misconduct in the performance of the Executive’s duties to us or its affiliates under this Agreement, or willful refusal or failure to carry out the lawful instructions of the Board of Directors that are consistent with the Executive’s title and position; (v) violation of any fiduciary duty owed to us or any of its affiliates; or (vi) breach of any restrictive covenant (as defined) or material breach or violation of any other provision of the employment agreement, of a written policy or code of conduct of our company or any of our affiliates (as in effect from time to time) or any other agreement between the Executive and we or any of our affiliates. Except when such acts constituting Cause which, by their nature,

cannot reasonably be expected to be cured, the Executive will have twenty (20) days following the delivery of written notice by the Company of its intention to terminate the Executive’s employment for Cause within which to cure any acts constituting Cause. Following such twenty (20) day cure period, and if the reason stated in the notice is not cured, the Executive shall be given five (5) business days prior written notice to appear (with or without counsel) before the full Board for the opportunity to present information regarding his views on the alleged Cause event. After we provide the original notice of our intent to terminate Executive’s employment for Cause, we may suspend the Executive, with pay, from all his duties and responsibilities and prevent him from accessing our or our affiliates premises or contacting any of our personal or any of our affiliates until a final determination on the hearing is made. The Executive will not be terminated for Cause until a majority of the independent directors approve such termination following the hearing.

For the purposes of each of the Claiborne EA and Truluck EA, “Change of Control” is defined as: (i) the accumulation over a twelve (12) month period, whether directly or indirectly, by any individual, entity or group of our securities representing over fifty (50%) percent of the total voting power of all our then outstanding voting securities; (ii) a merger or consolidation of us in which our voting securities immediately prior to the merger or consolidation do not represent, or are not converted into securities that represent, a majority of the voting power of all voting securities of the surviving entity immediately after the merger or consolidation; (iii) a sale of substantially all of our assets; or (iv) during any period of twelve (12) consecutive months, our current directors, together with any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, cease for any reason to constitute at least a majority of the Board of Directors.

Consulting Agreements

On March 24, 2019, we entered into a three-year consulting agreement with Bankole Johnson. Dr. Johnson’s consulting agreement with us (the “Johnson Consulting Agreement”) provides that Dr. Johnson will serve as our Chief Medical Officer and devote 75% of his working time to our business and affairs and will receive: (i) an annual fee of $375,000 a year; (ii) a signing bonus of $250,000 (which he received); and (iii) an option to purchase 250,000 shares of our common stock. The shares of common stock underlying the option award vests pro rata on a monthly basis over a thirty-six month period. The options are exercisable for a period of ten years from the date of grant and have an exercise price of $3.01 per share. On March 22, 2022, the agreement was extended for an additional three-year term, to expire on March 21, 2025 and to be terminable by either party for any reason on 30 days notice. On September 8, 2022, the agreement was further amended to increase the annual fee due Dr. Johnson to $435,000 and to grant Dr. a number of bonuses in cash and equity, contingent on achieving certain milestones.

The Johnson Consulting Agreement may be terminated by us upon Dr. Johnson’s death, upon thirty days’ notice for a material breach of the Consulting Agreement by Dr. Johnson that can be cured, after notice of breach and failure to cure; upon notice for a breach of the Consulting Agreement by Dr. Johnson that cannot be cured; upon thirty days’ notice for any other cause.

On March 15, 2023, we entered into a nine-month consulting agreement with Tony Goodman (the “Goodman Consulting Agreement”), one of our directors. Pursuant to the terms of the Goodman Consulting Agreement, Mr. Goodman is to receive a cash payment of $22,000 per month and will receive a grant of 100,000 shares of Common Stock upon consummation of a partnering transaction if such transaction is consummated prior to December 31, 2024.

Indemnification Agreements

We entered into agreements with each Executive and each director under which we will be required to indemnify them against expenses, judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement and other amounts actually and reasonably incurred in connection with an actual or threatened proceeding if any of them may be made a party because the Executive or director is or was one of our Executives. We will be obligated to pay these amounts only if the executive or director acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to our best interests. With respect to any criminal proceeding, we will be obligated to pay these amounts only if the Executive or director had no reasonable cause to believe his/her conduct was unlawful. The indemnification agreements also set forth procedures that will apply in the event of a claim for indemnification.

OTHER INFORMATION REGARDING THE COMPANY

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of September 28, 2023, with respect to the beneficial ownership of our Common Stock (includingcommon stock by each of the following:

•        each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock;

•        each of our directors;

•        each of our named executive officers; and

•        all of our directors and executive officers as a group.

As of September 28, 2023, we had 1,217,981 shares issuable upon the exercise or conversion of securities that entitle the holders thereof to obtain Common Stock upon exercise or conversion in accordance with the terms thereof) as of February 24, 2023, by:

common stock outstanding.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of options,profits interest units, warrants or other rights that are either immediately exercisable or exercisable on or before February 24,November 27, 2023, which is approximately 60 days after the date of this proxy statement. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as indicatedotherwise noted below, the address for each of the individuals and entities listed in the footnotes to this table each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Adial Pharmaceuticals, Inc., 1180 Seminole Trail, Suite 495 Charlottesville, Virginia 22901. As

____________

*        less than 1%

(1)      Comprised of February 24, 2023, we had 28,516,56460,799 shares of Common Stock outstanding.common stock and an option to purchase 8,800 shares of common stock which will vest within 60 days of September 28, 2023, which shares were part of total option grants to purchase 19,866 shares of our common stock.

(2)      Comprised of 10,605 shares of our common stock. Includes option to purchase 25,322 shares of common stock, which will vest within 60 days of September 28, 2023, which shares were part of a total option grant to purchase 30,405 shares of our common stock.

(3)      Includes (i) 37,573 shares of common stock and a warrant to acquire 218 shares of our common stock having an exercise price of $190.86 per share; (ii) 13,330 shares of common stock and a warrant to acquire 392 shares of our common stock having an exercise price of $190.86 per share owned by Mr. Stilley and his wife Anne T. Stilley. Does not include (x) 223 shares of our common stock owned by the Meredith A. Stilley Trust dtd 11/23/2010; (y) 223 shares of our common stock owned by the Morgan J. Stilley Trust dtd 11/23/2010; and (z) 223 shares of our common stock owned by the Blair E. Stilley Trust dtd 11/23/2010. The trusts are for the benefit of Mr. Stilley’s children and Mr. Stilley is not the trustee. Mr. Stilley disclaims beneficial ownership of these shares except to the extent of any pecuniary interest he may have in such shares. The number of shares reported for Mr. Stilley represents the number of shares he and the trusts received in connection with the corporate conversion/reincorporation and subsequent stock issuances. Includes option to purchase 51,865 shares of common stock which will have been vested within 60 days of September 28, 2023, which shares were part of total option grants originally to purchase 56,698 shares of our common stock, but which were reduced to 51,865 with the cancellation of options unvested on September 18, 2023, the date of Mr. Stilley’s resignation. If unexercised, all remaining options will be cancelled on December 17, 2023, which is 90 days from the date of Mr. Stilley’s resignation.

(4)      Includes option to purchase 5,790 shares of common stock which will vest within 60 days of September 28, 2023, which shares were part of total option grants to purchase 7,823 shares of our common stock.

(5)      Includes option to purchase 5,790 shares of common stock which will vest within 60 days of September 28, 2023, which shares were part of total option grants to purchase 7,823 shares of our common stock.

(6)      Includes (i) 5,929 shares of our common stock, owned by En Fideicomiso De Mi Vida 11/23/2010 (Trust); (ii) 3,720 shares of our common stock owned by En Fidecomiso de Todos Mis Suenos Grantor Retained Annuity Trust dated June 27, 2017; (iii) 8,041 shares of our common stock and a warrant to purchase 131 shares of our common stock having an exercise price of $190.86, both owned directly by Bankole A. Johnson; (iv) 892 shares of our common stock owned by En Fideicomiso De Mis Suenos 11/23/2010 (Trust); (v) 403 shares of our common stock owned by De Mi Amor 11/23/2010 (Trust); (vi) an aggregate of 372 shares of our common stock owned by Efunbowale Johnson, Ade Johnson, Lola Johnson, Lina Tiouririne, and Aida Tiouririne from whom Dr. Johnson has an voting proxy, (vi) 1,618 shares of our common stock owned by Medico-Trans Company, LLC. Medico-Trans Company, LCC is controlled by Bankole Johnson. Dr. Johnson is the Trustee of each Trust. Includes option to purchase 11,556 shares of common stock which will have been vested within 60 days of September 28, 2023, which shares were part of total option grants to purchase 13,223 shares of our common stock.

(7)      Includes (i) 6,117 shares of common stock, a warrant to purchase 216 shares of our common stock having an exercise price of $0.13 per share, and a warrant to purchase 198 shares of our common stock having an exercise price of $190.86 per share, all owned by Virga Ventures, LLC; (ii) 1,646 shares of our common stock and a warrant to acquire 94 shares of our common stock having an exercise price of $190.86 per share, all owned by Newman GST Trust FBO James W. Newman Jr; (iii) 2,008 shares of our common stock and a warrant to acquire 47 shares of our common stock having an exercise price of $190.86 per share, both owned by Ivy Cottage Group, LLC.; (iv) 13,079 shares of our common stock, a warrant to acquire 108 shares of our common stock having an exercise price of $0.13 per share, and a warrant to acquire 28 shares of our common stock having an exercise price of $190.86 per share, all owned by Rountop Limited Partnership, LLP; (v) 1,385 shares of common stock held in a Roth IRA for the benefit of Mr. Newman; (vi) 800 shares of common stock owned directly by Mr. Newman, and (vii) 200 shares of common stock owned by Courtney Newman, daughter of Mr. Newman. Mr. Newman is the sole member of Virga Ventures, LLC, the general partner of Ivy Cottage Group, LLC and Rountop Limited Partnership, LLP, and Trustee of the Newman GST Trust. Includes option to purchase 5,790 shares of common stock which will vest within 60 days of September 28, 2023, which shares were part of total option grants to purchase 7,823 shares of our common stock.

(8)      Includes (i) 121 shares of our common stock, a warrant to acquire 78 shares of our common stock at an exercise price of $0.13 per share, and a warrant to acquire 46 shares of common stock at exercise price of $190.86, owned by Carolyn M. Schuyler, Mr. Schuyler’s wife, (ii) warrant to acquire 40 shares common stock at exercise price of $0.13 per share and warrant to acquire 345 shares common stock at exercise price of $190.86 per share, all owned by the Kevin William Schuyler 2020 Irrevocable Perpetuities Trust, for which Mr. Schuyler’s wife Carolyn M. Schuyler, is trustee, and (iii) 5,768 shares of common stock, all owned directly by MVA 151 Investors, LLC. MVA 151 Investors, LLC is an entity under Mr. Schuyler’s control. Includes option to purchase 5,790 shares of common stock which will vest within 60 days of September 28, 2023, which shares were part of total option grants to purchase 7,823 shares of our common stock.

(9)      Includes 350 shares of our common stock. Mr. Goodman has also been granted an option to purchase 9,046 shares of our common stock, of which 6,568 are vested and exercisable within 60 days of September 28, 2023.

(10)    Includes all of the current directors, all of the named executive officers (save William Stilley) and Dr. Johnson.

NO DISSENTERS’ RIGHTS

The corporate actions described in this proxy statement will not afford stockholders the opportunity to dissent from the actions described herein or to receive an agreed or judicially appraised value for their shares.

each Bespoke, Keystone, and Richard Gilliam, a private investor (“Gilliam”) (collectively, the “Investors,” and each an “Investor”), pursuant to which: (i) Bespoke agreed to purchase an aggregate of 33,333 shares of our common stock at a purchase price of $75.00 per share for aggregate gross proceeds of $2,500,002; (ii) Keystone agreed to purchase an aggregate of 20,000 shares of our common stock at a purchase price of $75.00 per share for aggregate gross proceeds of $1,500,000; and (iii) Gilliam agreed to purchase an aggregate of 13,333 shares of our common stock at a purchase price of $75.00 per share for gross proceeds of $1,000,002.

Under the terms of the July SPAs, on July 7, 2021: (i) Bespoke purchased 3,333 shares of our common stock and agreed to purchase an additional 30,000 shares of our common stock upon the effectiveness of the Registration Statement; (ii) Keystone purchased 2,000 shares of the Company’s common stock and agreed to purchase an additional 18,000 shares of our common stock upon the effectiveness of the registration statement; and (iii) Gilliam purchased 1,333 shares of our common stock and agreed to purchase an additional 12,000 shares of our common stock upon the effectiveness of the Registration Statement.

Under the terms of the July SPAs, on August 2, 2021, Bespoke purchased 30,000 shares of our common stock for proceeds of $2,250,000; and on August 4, 2021, Keystone purchased 18,000 shares of our common stock for proceeds of $1,350,000 and Gilliam purchased 12,000 shares of our common stock for proceeds of $900,000. The shares sold pursuant to the July SPAs were registered though a registration statement on Form 10-Q for the period ended September 30, 2022, We encourage you to read our Certificate of Incorporation, our Bylaws, and the applicable provisions of Delaware General Corporation Law, for additional information.

Common Stock

Authorized Shares of Common Stock. We currently have authorized 50,000,000 shares of Common Stock.

Voting Rights. The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders, except on matters relating solely to terms of preferred stock. 

Dividend Rights. Subject to preferencesS-3 that may be applicable to any outstanding preferred stock, the holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor.

Liquidation Rights. In the event of our liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.

Other Rights and Preferences. The holders of our Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our Common Stock. 

Fully Paid and Nonassessable. All of our issued and outstanding shares of Common Stock are fully paid and nonassessable.

OTHER MATTERS

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

2023 ANNUAL MEETING

As previously stated in our proxy statementwas filed with the SEC on SeptemberJuly 20, 2021 and declared effective on July 29, 2021.

On November 9, 2021, we entered into a Securities Purchase Agreement with Bespoke (“the November SPA”) whereby Bespoke agreed to purchase up to 8,000 shares of our common stock at a price of $100.00 per share for an aggregate investment of $800,000. Pursuant to the terms of the November SPA, Bespoke purchased an initial 800 shares of our common stock on November 9, 2021 and agreed to purchase an additional 7,200 shares of our common stock upon the effectiveness of a registration statement. On December 17, 2021, after the effectiveness of a registration statement on form S-3, the additional 7,200 were sold.

Purnovate Option Agreement

On January 27, 2023, we and Adenomed LLC (now known as Adovate, LLC, the “Buyer”) entered into an Option Agreement (the “Option Agreement”) pursuant to which we granted to the Buyer an exclusive option for a period of one hundred twenty (120) days from the effective date of the Agreement (the “Option Term”) for Buyer or its designated affiliate to acquire all of the assets of Purnovate, Inc. (“Purnovate”), our wholly owned subsidiary. William Stilley, our former director and Executive Vice President and former Chief Executive Officer of Purnovate, Inc., serves as the President of Buyer and is the principal stockholder of Buyer. As consideration for the Option Agreement, we and Mr. Stilley entered into an amendment to Mr. Stilley’s employment agreement, as amended (the “Stilley Amendment”), that (i) deleted the provision of the employment agreement that provided that the termination by Mr. Stilley of his employment on or before February 22, 2023 shall be deemed to be a termination by him for good reason and (ii) added a provision to the employment agreement providing that Mr. Stilley will not serve on a full time basis for us and may provide services to other businesses including Buyer. The Option Agreement also provides that the Buyer may elect to acquire all of the equity of Purnovate from us instead of purchase all of the assets of Purnovate.

The Buyer has the right to extend the Option Term for an additional thirty (30) consecutive day period by the payment of One Hundred Thousand Dollars ($100,000) to us prior to the end of the original Option Term, and Buyer may also extend the Option Term for another thirty (30) consecutive day period by the payment of Fifty Thousand Dollars ($50,000) to us prior to the end of the extended Option Term.

The Buyer had the right to exercise the Option by paying a cash exercise price of $150,000, which was exercised on May 8. 2023. Upon exercise of the Option, we transferred to and Buyer assumed liabilities of Purnovate, including: (i) trade payables incurred for services or purchases by Purnovate exclusively for its research operations; (ii) any unpaid salaries of personnel on Purnovate’s payroll; and (iii) the lease for 1180 Seminole Trail, Suite 495, Charlottesville, VA 22901 (as modified). All other Purnovate liabilities, shall be retained by, or transferred to, us and any amounts owed by Purnovate to us will be extinguished. We will be reimbursed by Buyer for any Purnovate expenditures incurred and paid commencing December 2022, to be paid within thirty (30) days of execution of the final acquisition agreement, and will hold a security interest in the assets of Buyer until the expense reimbursement is paid in full and the equity in Buyer described below is issued to us.

The Option Agreement sets forth the terms of the definitive acquisition agreement to be negotiated in good faith by the parties after exercise of the Option which include: (i) a cash payment of $300,000 upon the completion of the definitive acquisition agreement (in additional to the option exercise fee); (ii) the issuance by Buyer to Company of 19.99% of the equity of Buyer within thirty (30) days of execution of the final acquisition agreement (such 19.99% to be subject to anti-dilution protection until the Buyer has raised $4,000,000); (iii) the assumption by Buyer of the obligations of Company under that certain Equity Purchase Agreement by and among Company, Purnovate, the members of Purnovate, and Robert D. Thompson as the member’s representative, dated December 7, 2020 and amended January 25, 2021 (the “PNV EPA”); (iv) the assumption by Buyer of the obligations of Company under that certain Employment Agreement, dated July 31, 2018, as amended, by and between Company and William Stilley; (v) a low, single digit royalty payments on net sales; (vi) cash payments of up to approximately $11 million in development and approval milestones for each compound after payments to the prior members of Purnovate pursuant to the PNV EPA; and (vii) cash payments of up to an aggregate of $50,000,000 upon the achievement of certain commercial milestones.

The Option Agreement was approved by our Board of Directors and by a committee of our Board of Directors consisting solely of independent directors.

On May 8, 2023, the Buyer gave irrevocable notice of its exercise of the Option to acquire all of the assets and business of Purnovate under that certain Option Agreement. In connection with exercise of the Option, we received from Buyer a non-refundable option exercise fee and upfront payment of $450,000 and entered into an option exercise agreement with Buyer (the “Option Exercise Agreement”) providing that the exercise of the Option will be effective as of May 16, 2023 and that any Purnovate expenses incurred on or subsequent to May 16, 2023 will be the sole responsibility of Buyer.

Effective June 30, 2023, we completed the sale of the assets and business of Purnovate to Buyer under the Option Agreement. Pursuant to the Option Agreement and Option Exercise Agreement, in consideration for the sale to Buyer of the assets and business of Purnovate: (i) we received a non-refundable option exercise fee and upfront payment of $450,000; (ii) Buyer will reimburse all approved Purnovate expenditures incurred and paid commencing December 1, 2022 through and including May 15, 2023, (iii) Buyer issued to us 19.99% of the equity of Buyer; (iv) Buyer assumed our obligations under that certain Equity Purchase Agreement by and among us, Purnovate, the members of Purnovate, and Robert D. Thompson as the member’s representative, dated December 7, 2020 and amended January 25, 2021 (the “PNV EPA”); (v) Buyer assumed our obligations under that certain Employment Agreement, dated July 31, 2018, as amended, by and between Buyer and William Stilley; and (vi) we will receive low, single digit royalty payments on net sales, cash payments of up to approximately $11 million in development and approval milestones for each compound after payments to the prior members of Purnovate pursuant to Rule 14a-8the PNV EPA and cash payments of up to an aggregate of $50,000,000 upon the achievement of certain commercial milestones.

On September 18, 2023, we entered into a final acquisition agreement (the “FAA”) with the Buyer to memorialize the sale effective on June 30, 2023 (the “Sale”) to Adovate of the assets and business of Purnovate pursuant to the Option Agreement and related 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 us by Buyer 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 us by Buyer, $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 Buyer 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 Buyer equity raises in order to maintain at least 15% ownership in Buyer. The anti-dilution protection expires upon Buyer receiving $4,000,000 in cumulative funding since January 27, 2023.

Orbytel Consulting Agreement

On October 24, 2022, we entered into a Master Services Agreement (the “MSA”) with Abuwala & Company, LLC, dba as Orbytel, for provision of strategic consulting services. Orbytel made it known that it intended to utilize the services of the Keswick Group, LLC as a subcontractor in the provision of these services. Tony Goodman, a director, is the founder and principal of Keswick Group, LLC, therefor Orbytel was considered a related party.

Review, Approval and Ratification of Transactions with Related Persons

The general policy of Adial Pharmaceuticals, Inc. and our audit committee is that all material transactions with a related-party and agreements with related parties, as well as all material transactions in which there is an actual, or in some cases, perceived, conflict of interest, will be subject to prior review and approval by our audit committee and its independent members, which will determine whether such transactions or proposals are fair and reasonable to our company and our stockholders. In general, potential related-party transactions will be identified by our management and discussed with our audit committee at our audit committee’s meetings. Detailed proposals, including, where applicable, financial and legal analyses, alternatives and management recommendations, will be provided to our audit committee with respect to each issue under consideration and decisions will be made by our audit committee with respect to the foregoing related-party transactions after opportunity for discussion and review of materials. When applicable, our audit committee will request further information and, from time to time, will request guidance or confirmation from internal or external counsel or auditors. Our policies and procedures regarding related-party transactions are set forth in our Audit Committee Charter and Code of Business Conduct and Ethics, both of which are publicly available on our website at www.adial.com under the Exchange Act, a stockholder proposal submitted for inclusion in ourheading “Investors — Corporate Governance.”

APPENDIX A

HouseholdingAMENDMENT NO. 5 TO THE
ADIAL PHARMACEUTICALS, INC.
2017 EQUITY INCENTIVE PLAN

This amendment (the “Amendment”) to the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “Plan”), is hereby adopted this day of Proxy MaterialsNovember [•], 2023, by the Board of Directors (the “Board”) of Adial Pharmaceuticals, Inc. (the “Company”). All capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Plan.

WITNESSETH:

Some brokersWHEREAS, the Company adopted the Plan for the purposes set forth therein; and other nominee record holders

WHEREAS, pursuant to Section 15 of the Plan, the Board of Directors has the right to amend the Plan with respect to certain matters, provided that any material increase in the number of Shares available under the Plan shall be subject to stockholder approval; and

WHEREAS, the Board of Directors has approved and authorized this Amendment to the Plan and has recommended that the stockholders of the Company approve this Amendment; and

NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended, subject to and effective as of the date of stockholder approval hereof, in the following particulars:

1.      Section 4(a) of the Plan is hereby amended by increasing the share references in such section from 380,000 to 500,000, so that Section 4(a) reads in its entirety as follows:

“(a) Shares Available for Awards.    The maximum aggregate number of shares of Company Stock reserved for issuance under the Plan (all of which may be “householding” our granted as Incentive Stock Options) shall be Five Hundred Thousand (500,000) shares. Shares reserved under the Plan may be authorized but unissued Company Stock or authorized and issued Company Stock held in the Company’s treasury. The Compensation Committee may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares pursuant to the Plan.”

2.      Except as specifically set forth herein, the terms of the Plan shall be and remain unchanged, and the Plan as amended shall remain in full force and effect.

The foregoing is hereby acknowledged as being the Amendment to the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan, as adopted by the Board of Directors on August [•], 2023, and approved by the Company’s stockholders on November [•], 2023.