[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I-FINANCIAL%20INFORMATION) [Condensed Consolidated Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Unaudited%20Financial%20Statements) The company reported a net loss of $4.8 million in Q1 2021, with assets growing to $8.6 million, and faces substantial doubt about its going concern ability [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $8.6 million as of March 31, 2021, primarily due to cash and the Purnovate acquisition, with liabilities rising to $3.0 million Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 6,172,299 | 5,135,838 | | **Total Assets** | **8,625,499** | **5,491,444** | | **Total Current Liabilities** | 2,042,340 | 1,505,378 | | **Total Liabilities** | 3,007,857 | 1,505,378 | | **Total Shareholders' Equity** | 5,617,642 | 3,986,066 | | **Total Liabilities and Shareholders' Equity** | **8,625,499** | **5,491,444** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a net loss of $4.83 million in Q1 2021, significantly higher than the prior year, primarily due to increased R&D and G&A expenses Condensed Consolidated Statements of Operations (Unaudited) | | Three months ended March 31, 2021 ($) | Three months ended March 31, 2020 ($) | | :--- | :--- | :--- | | Research and development expenses | 2,051,623 | 1,059,578 | | General and administrative expenses | 2,788,711 | 1,240,667 | | **Total Operating Expenses** | **4,840,334** | **2,300,245** | | **Loss From Operations** | **(4,840,334)** | **(2,300,245)** | | **Net Loss** | **(4,833,764)** | **(2,276,813)** | | **Net loss per share, basic and diluted** | (0.30) | (0.22) | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to $5.6 million by March 31, 2021, driven by equity financing and the Purnovate acquisition, despite a net loss - Key activities affecting shareholders' equity in Q1 2021 included the sale of common stock (**$2.6M**), warrant exercises (**$1.4M**), stock issued for an acquisition (**$1.1M**), and equity-based compensation (**$1.3M**), offset by a net loss of **$4.8M**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $1.24 million in Q1 2021, driven by $4.08 million in financing activities, offsetting $2.84 million used in operations Condensed Consolidated Statements of Cash Flows (Unaudited) | | Three months ended March 31, 2021 ($) | Three months ended March 31, 2020 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (2,843,424) | (1,825,421) | | Net cash provided by (used in) investing activities | (286) | 0 | | Net cash provided by financing activities | 4,080,503 | 0 | | **Net Increase (Decrease) in Cash** | **1,236,793** | **(1,825,421)** | | **Cash and Cash Equivalents - End of Period** | **5,637,907** | **4,951,631** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the Purnovate acquisition, and liquidity risks, highlighting a going concern warning and significant future payment commitments - The company has commenced its first Phase 3 clinical trial for its lead compound AD04 for the treatment of alcohol use disorder[22](index=22&type=chunk) - On January 26, 2021, the company acquired its wholly owned subsidiary, Purnovate, Inc., a drug development company focused on non-opioid pain reduction[23](index=23&type=chunk) - The financial statements have been prepared on a going concern basis, but the company's recurring losses, negative cash flows, and accumulated deficit of approximately **$36.4 million** raise substantial doubt about its ability to continue as a going concern. Existing cash is expected to fund operations only into the fourth quarter of 2021[24](index=24&type=chunk) - The acquisition of Purnovate was a related-party transaction, as Adial's CEO, William B. Stilley, owned **28.73%** of Purnovate's membership interests[56](index=56&type=chunk) - The company has an ongoing master services agreement with Crown CRO Oy for its Phase 3 clinical study, with remaining future milestone payments totaling approximately **$949,588**, plus estimated pass-through costs of around **$3.1 million**[98](index=98&type=chunk)[100](index=100&type=chunk)[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A details AD04 development and Purnovate acquisition, analyzing increased expenses that drove a higher net loss, and highlights critical liquidity challenges - The company's landmark ONWARD pivotal Phase 3 clinical trial for AD04 is more than **50% enrolled**, with completion expected by the first quarter of 2022[123](index=123&type=chunk) - The COVID-19 pandemic caused delays in obtaining regulatory approvals and slowed trial enrollment in 2020, pushing the projected completion of the Phase 3 trial to Q1 2022 and increasing costs[148](index=148&type=chunk) Results of Operations Comparison (in thousands of dollars) | | For the Three Months Ended March 31, 2021 ($) | For the Three Months Ended March 31, 2020 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and development expenses | 2,052,000 | 1,060,000 | 992,000 | | General and administrative expenses | 2,789,000 | 1,241,000 | 1,548,000 | | **Net Loss** | **(4,834,000)** | **(2,278,000)** | **(2,556,000)** | - Current cash and cash equivalents are not sufficient to fund operations for the next twelve months. The company expects to exhaust funds in Q4 2021 and will require approximately **$2.7 million** in additional funding to reach the expected database lock for its clinical trial in February 2022[156](index=156&type=chunk)[157](index=157&type=chunk) - The company has an equity purchase agreement with Keystone Capital, LLC, allowing for up to **$15 million** in equity financing, of which **$2.85 million** had been raised as of the filing date. Access to the remaining funds is dependent on the stock's market price and other conditions[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states this item is not applicable, indicating no significant exposure to market risks requiring quantitative and qualitative disclosure - The company has determined that quantitative and qualitative disclosures about market risk are not applicable[181](index=181&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2021, due to identified material weaknesses, despite believing financial statements are fairly presented - Management identified material weaknesses in internal control over financial reporting and concluded that disclosure controls and procedures were not effective as of March 31, 2021[181](index=181&type=chunk) - Identified weaknesses include: inadequately documented policies, lack of proper approval/review processes, insufficient GAAP experience, and insufficient staff to maintain optimal segregation of duties[181](index=181&type=chunk) - Notwithstanding the material weaknesses, management has concluded that the financial statements included in the quarterly report are fairly presented in all material respects[182](index=182&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II-OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that would materially adversely affect its business, financial condition, or cash flows - As of the reporting date, the company is not a party to any material legal proceedings[184](index=184&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing the company's history of net losses, substantial doubt about its going concern ability, and the need for significant additional financing - The company has a history of net losses, with an accumulated deficit of approximately **$36.4 million** as of March 31, 2021, and anticipates continued losses[187](index=187&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern, as current funds are projected to be exhausted in the fourth quarter of 2021 without additional financing[190](index=190&type=chunk) - Significant additional financing is required to complete clinical trials and support operations. Failure to raise capital could negatively impact business strategies and may lead to significant shareholder dilution[192](index=192&type=chunk)[194](index=194&type=chunk) - Officers and directors beneficially own approximately **28%** of the company's outstanding common stock, giving them significant influence over corporate matters[198](index=198&type=chunk) - The company's stock price has been and may continue to be volatile, which could result in substantial losses for investors[202](index=202&type=chunk)[203](index=203&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the quarter, beyond those previously disclosed in SEC filings, with other sections marked not applicable - No unregistered sales of equity securities occurred during the three months ended March 31, 2021, other than those previously disclosed in SEC filings[207](index=207&type=chunk) [Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[207](index=207&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[207](index=207&type=chunk) [Other Information](index=42&type=section&id=Item%205.%20Other%20Information) The company reports no other information to disclose for this period - Not applicable[207](index=207&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material agreements, and CEO/CFO certifications - This section lists exhibits filed with the report, including certifications required by the Sarbanes-Oxley Act (Sections 302 and 906) and various corporate and transactional agreements[209](index=209&type=chunk)[211](index=211&type=chunk)

Financial Reporting and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which may lead to material misstatements in financial statements [240]. - The company is subject to increasing legal, accounting, and financial compliance costs due to the reporting requirements of the Sarbanes-Oxley Act [238]. - The company anticipates incurring significant legal, accounting, and compliance costs as a public entity, which were not present as a private company [399]. - The company is classified as an "emerging growth company" and will remain so until total annual gross revenue exceeds $1.07 billion or other specified conditions are met [397]. Clinical Trials and Product Development - The company is currently conducting the ONWARD Phase 3 clinical trial for its lead product candidate, AD04, with approximately 290 patients in Scandinavia and Central and Eastern Europe [248]. - The company anticipates completing patient enrollment in the ONWARD pivotal Phase 3 clinical trial in Q2 or Q3 of 2021, but patient enrollment challenges may lead to significant delays [286]. - The company plans to test AD04 in adolescent patients (ages 12-17) as part of the next Phase 3 trial [272]. - The company has limited experience in conducting clinical trials, which may impact the timely completion of planned trials [279]. - The company cannot guarantee that the clinical trial material produced will be approved for use in trials, which could delay the clinical program [274]. - Success in preclinical testing and early clinical trials does not ensure later clinical trials will be successful, which could delay commercialization [281]. - The company must demonstrate safety and efficacy through lengthy and expensive preclinical testing and clinical trials before obtaining regulatory approvals for AD04 and future product candidates [283]. - The FDA may require additional clinical trials for patients negative for the targeted genotypes, potentially delaying approval [270]. - The approval of AD04 is contingent upon the successful development and approval of a companion diagnostic genetic test [275]. - The Phase 3 trials are expected to last 24 weeks, compared to the 12 weeks of the Phase 2b trial [268]. - The FDA has indicated that a satisfactory endpoint for the Phase 3 trial will be the percentage of patients with no heavy drinking days in the last two months of a six-month treatment regimen [269]. Market and Competitive Landscape - The pharmaceutical industry is characterized by rapid technological change and substantial competition, which may impair the company's business [289]. - The company will compete against larger pharmaceutical companies and smaller firms with greater resources and experience in drug development and commercialization [291]. - The success of the product candidates will depend on acceptance by physicians, healthcare payers, and patients, particularly as the products are intended to be used in conjunction with genetic testing [288]. - Market acceptance of AD04 and future product candidates is uncertain, and failure to gain acceptance could significantly harm revenue generation [319]. Financial Risks and Funding - The company currently generates no revenues from its product candidate and may never be able to develop or commercialize a marketable drug [251]. - The company may need to raise additional financing through equity sales, which could have a dilutive effect on existing shareholders [237]. - The company may require additional financing in the future, which could lead to dilution of existing shareholders' equity [408]. - If the common stock is de-listed and trades as a "penny stock," it may face additional regulatory requirements that could limit trading activity and increase transaction costs [410]. - The company may incur substantial costs if its products infringe on the proprietary rights of other parties, which could include obtaining licenses, redesigning products, or paying damages [349]. Intellectual Property and Legal Risks - There is a risk of third parties asserting claims related to their intellectual property rights, which could lead to costly litigation and diversion of resources [348]. - The company has limited protection for its intellectual property, and unauthorized use of technology may occur despite licensing efforts [340]. - The company cannot assure that pending patent applications will be approved or that issued patents will provide significant commercial protection [343]. - Non-compliance with patent application requirements could lead to abandonment or loss of patent rights, allowing competitors to enter the market [356]. - The company may face lawsuits to protect or enforce patents, which could be expensive and time-consuming, with adverse outcomes risking the validity of licensed patents [351]. Strategic Partnerships and Acquisitions - The company may pursue acquisitions and joint ventures, but lacks experience in integrating such transactions successfully [377]. - The company relies on collaboration agreements for the commercialization of investigational product candidates, which may involve greater uncertainty and less control [335]. - If strategic partnerships are not established or maintained, the development of current and future product candidates may be delayed or terminated [332]. - The acquisition of Purnovate is expected to provide strategic benefits, but there is no assurance that these benefits will materialize or enhance stockholder value [292]. Stockholder and Governance Issues - The company has outstanding warrants to purchase 7,957,225 shares at a weighted average exercise price of $4.83, which could dilute common stock ownership [389]. - The company’s board is authorized to issue 50,000,000 shares of common stock and 5,000,000 shares of preferred stock, potentially diluting existing shareholders [390]. - The company has never paid dividends and does not plan to do so in the future, intending to retain future earnings for operations [392]. - Provisions in the corporate charter and Delaware law may complicate potential acquisitions, potentially hindering stockholder interests [411]. - The company's board of directors is divided into three classes, with each class serving a three-year term, which may limit stockholder influence on management [412].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38323 ADIAL PHARMACEUTICALS, INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | |------ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38323 ADIAL PHARMACEUTICALS, INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | |----------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38323 ADIAL PHARMACEUTICALS, INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | |---------- ...