Item 1.01. Entry into a Material Definitive
Agreement.
On February 23, 2023, Adial Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), entered into a securities purchase agreement (the “Purchase Agreement”)
with an accredited institutional investor (the “Investor”) providing for the issuance of 1,829,269 shares (the “Shares”)
of the Company’s common stock, par value $0.001 (the “Common Stock”). Pursuant to the Purchase Agreement, the Investor
is purchasing the Shares for an aggregate purchase price of approximately $750,000.
The Company estimates that the net proceeds from
the offering will be approximately $550,000 after deducting certain fees due to the Placement Agent, as hereinafter defined, and the Company’s
estimated transaction expenses. The net proceeds received by the Company will be used for working capital purposes.
Pursuant to the Purchase Agreement, an aggregate
of 1,829,269 Shares will be issued to the Investor in a registered direct offering (the “Registered Offering”) and registered
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a prospectus supplement to the Company’s
currently effective registration statement on Form S-3 (File No. 333-237793), which was initially filed with the U.S. Securities and Exchange
Commission (the “SEC”) on April 22, 2020, and was declared effective on April 30, 2020 (the “Shelf Registration Statement”).
The Company expects to file the prospectus supplement for the Registered Offering on or about February 24, 2023.
The Registered Offering was also conducted pursuant
to a placement agency agreement, dated February 23, 2023 (the “Placement Agency Agreement”), by and between the Company and
Joseph Gunnar & Co., LLC (the “Placement Agent”). The Placement Agent has agreed to use its “reasonable best efforts”
to solicit offers to purchase the Shares. The Placement Agent has no obligation to purchase any of the Shares or to arrange for the purchase
or sale of any specific number or dollar amount of Shares. The Company has agreed to pay the Placement Agent a fee equal to 10% of the
aggregate purchase price paid by Investor placed by the Placement Agent and certain expenses not to exceed $35,000. The Company also agreed
to issue to the Placement Agent a warrant (the “Placement Agent Warrants”) to purchase up to an aggregate of 182,927 shares
of common stock, representing 10% of the aggregate number of shares of Common Stock sold in the Registered Offering. The Placement Agent
Warrants will have an exercise price equal to $0.41 and will be exercisable beginning on the date which is two months after the closing
date and expire five years after the date of issuance. The Placement Agent Warrants will have a cashless exercise provisions and provide
for customary anti-dilution protection but not price protection.
The Company expects the Registered Offering to
close on or about February 24, 2023, subject to the satisfaction of customary closing conditions in the Purchase Agreement and the Placement
Agency Agreement. The Purchase Agreement and the Placement Agency Agreement contain customary representations, warranties and agreements
of the Company, the Investor and the Placement Agent and customary indemnification rights and obligations of the parties thereto.
The Company also entered into a voting agreement
(the “Voting Agreement”) with the Investor, pursuant to which the Investor agrees to vote all shares of Common Stock that
it beneficially owns on and after February 23, 2023 with respect to all of the proposals presented by the Company to the stockholders
of the Company at the Company’s next meeting of its stockholders, including at every adjournment or postponement thereof, or any
subsequent meeting of its stockholders duly called for the same or similar purposes. The Investor’s agreement to vote its shares
of Common Stock does not require the Investor to vote its shares for or against any particular proposal or proposals, whether or not such
proposal or proposals are recommended by the Company’s board of directors.
The foregoing description of the Placement Agent
Warrant, the Purchase Agreement, the Placement Agency Agreement and the Voting Agreement are qualified in their entirety by reference
to the full text of the form of the Placement Agent Warrant, the form of Purchase Agreement, the Placement Agency Agreement and the form
of Voting Agreement, the forms of which are attached as Exhibits 4.1, 10.1, 10.2 and 10.3, respectively, to this Current Report on Form
8-K, and which are incorporated herein in their entirety by reference. The Company is also filing the opinion of its counsel, Blank Rome
LLP, relating to the legality of the issuance and sale of the Shares as Exhibit 5.1 hereto. Exhibit 5.1 is incorporated herein by reference
and into the Shelf Registration Statement.