Annual report pursuant to Section 13 and 15(d)

Subsequent Events

v3.21.1
Subsequent Events
12 Months Ended
Dec. 31, 2020
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

10 — SUBSEQUENT EVENTS

 

On January 26, 2021, the Company completed its acquisition of 100% of the equity interests of Purnovate, Inc. (See Notes 4 and 6) for cash consideration of $700,000 (including the $350,000 initial advance), the issuance 700,000 shares of Adial common stock ($2.34 at date of closing and contingent consideration for (i) certain development milestones in an aggregate amount of up to $2,100,000 for each compound (ii) milestones in an aggregate amount of up to $20,000,000 for each compound commercialized, and (iii) royalties of 3.0% of Net Sales (as defined in the Purchase Agreement). The equity consideration has been placed into escrow to secure certain indemnification and other obligations of Purnovate and the members.

 

The acquisition essentially included an in place workforce comprised of four employees, ongoing R&D projects and pending patents, the laboratory and office lease at 1180 Seminole Trail, Charlottesville, Virginia, laboratory equipment and glassware, and a significant library of chemical compounds that are expected to be used in their ongoing research and development projects or sold to other companies. Determination of the final fair value and purchase price allocation has not been completed as of the financial statement filing date. The Company has retained a third-party appraiser to assist in its valuation and purchase price allocation.

 

The Company has not presented unaudited pro forma combined results of operations as if Purnovate was acquired as of the beginning of fiscal year 2019 because it is impracticable to do so. Purnovate had no revenue and its recorded operating losses of approximately $0 and $376,000 in 2019 and 2020, respectively would not have been material to the Company's reported losses. However, once the valuation and purchase price allocation is completed, the impact of such may be material to the pro forma combined results of operations.

 

On February 8, 2021, the Compensation Committee of the Board of Directors (the "Committee") granted the Chief Executive Officer and Chief Financial Officer an option to purchase 250,000 and 125,000 shares of the Company's common stock, respectively. The options vest over thirty-six months period and are exercisable for a period of ten years at an exercise price of $3.11. In addition, on February 8, 2021, the Committee awarded board members cumulative options to purchase 200,000 shares of the Company's common stock vesting over thirty-six months which are exercisable for a period of ten years at $3.11.

 

On February 12, 2021, the Committee awarded the Chief Executive Officer and Chief Financial Officer 2020 performance bonuses of $200,000 in the aggregate. In addition, on February 12, 2021, the Company amended the CEO's and CFO's employment agreements to extend the term to March 31, 2026 and modify the "target bonus", as defined.

 

Between February 5, 2021 and March 12, 2021, the Company exercised its right under the equity purchase agreement with Keystone Capital, LLC to direct Keystone Capital to purchase 1,007,296 shares of common stock for a total proceeds of $2,350,000, at an average purchase price of $2.33 per share.

 

On February 25, 2021, previously issued warrants to purchase 712,500 shares of common stock at an exercise price of $2.00 per share were exercised for a total proceeds of $1,425,000.

 

On March 11, 2021, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreements") with each of Bespoke Growth Partners, Inc. ("Bespoke"), a company controlled by Mark Peikin, the Company's Chief Strategy Officer, three entities controlled by James W. Newman, Jr., a member of the Company's board of directors ("Newman"), and Keystone Capital Partners, LLC ("Keystone" collectively with Bespoke and Newman, the "Investors," and each an "Investor"), pursuant to which: (i) Bespoke agreed to purchase an aggregate of 336,667 shares of the Company's common stock at a purchase price of $3.00 per share for aggregate gross proceeds of $1,010,001; (ii) Newman agreed to purchase an aggregate of 30,000 shares of the Company's common stock at a purchase price of $3.00 per share for aggregate gross proceeds of $90,000; and (iii) Keystone agreed to purchase an aggregate of 333,334 shares of the Company's common stock at a purchase price of $3.00 per share for aggregate gross proceeds of $1,000,002.

 

Under the terms of the Securities Purchase Agreements: (i) Bespoke agreed to purchase 33,667 shares of the Company's common stock on the date the Securities Purchase Agreement was executed and an additional 303,000 shares of the Company's common stock upon the effectiveness of the Registration Statement; (ii) Newman agreed to purchase 30,000 shares of the Company's common stock on the date the Securities Purchase Agreement was executed; and (iii) Keystone agreed to purchase 33,334 shares of the Company's common stock on the date the Securities Purchase Agreement was executed and an additional 300,000 shares of the Company's common stock upon the effectiveness of the Registration Statement. At the date of filing, all purchases of shares effective on the date of the agreement had been completed, with fund received and shares issued.