Adial Pharmaceuticals Amends PIPE/Note Agreements to Restore Nasdaq Listing

What Happened

• Adial Pharmaceuticals, Inc. (ADIL) announced on Sept. 16, 2026 that it entered into Amendment No. 2 to the Securities Purchase Agreement and Amendment No. 1 to certain Note Exchange Agreements to (i) remove a “Penalty Provision” and (ii) add lock‑up restrictions on certain pre‑funded warrants.
• The change was prompted after the company’s June 30, 2026 quarter 10‑Q (filed Aug. 14, 2026) showed that the Penalty Provision required the company to classify the full value of certain Milestone Warrant rights as a liability, which caused stockholders’ equity to fall below Nasdaq’s minimum for continued listing and below the minimum for Nasdaq’s initial listing approval in connection with an anticipated change of control.
• The Note Exchange amendments apply to former Azora noteholders who received Initial Closing Noteholder Pre‑Funded Warrants to buy an aggregate of 1,504,098 shares; the company expects to enter into similar amendments with additional former noteholders.

Key Details

• Date of amendments: September 16, 2026.
• Quarter referenced: quarter ended June 30, 2026 (10‑Q filed Aug. 14, 2026).
• Pre‑funded warrants covered by the Note Exchange amendment: 1,504,098 shares of Common Stock.
• Annual Meeting: scheduled for Sept. 17, 2026 at 8:30 a.m. EDT; stockholders will vote on conversion of Series A Preferred Stock that would (i) represent more than 19.99% of common stock outstanding pre‑merger agreement and (ii) result in a Nasdaq‑defined change of control.
• The company filed an unaudited pro forma condensed consolidated balance sheet (Exhibit 99.1) for the quarter ended June 30, 2026 reflecting: (a) conversion of Series A Preferred into common stock and (b) the change in accounting treatment for the Milestone Warrants as a result of the amendments.

Why It Matters

• The amendments are intended to change the accounting classification of the Milestone Warrant rights from a liability back to equity, which should restore the company’s stockholders’ equity to meet Nasdaq’s minimum listing standards and support approval of the company’s initial listing application tied to the anticipated change of control.
• For investors, the actions could materially affect reported equity and the company’s compliance status with Nasdaq. The proposed Series A Preferred conversion (if approved at the Annual Meeting) would substantially increase common shares outstanding (>19.99%) and trigger a Nasdaq change‑of‑control review, so shareholders should monitor the Annual Meeting vote and subsequent SEC/Nasdaq disclosures.
• Lock‑up restrictions added by the amendments limit certain holders’ ability to sell shares issuable on exercise of pre‑funded warrants for the Lock‑Up Period specified in the amendments, which may reduce near‑term selling pressure from those specific warrant holders.