About the Transactions

The acquisition of Azora was structured as an asset acquisition pursuant to which all of Azora's outstanding equity interests were exchanged, based on a fixed exchange ratio, for a combination of 437,474 shares of Adial common stock and approximately 12,930 shares of Adial Series A non-voting convertible preferred stock (representing 12,930,617 shares on an as-converted-to-common basis), in each case, calculated on a fully-diluted basis (and without giving effect to any beneficial ownership limitations). Concurrently with the acquisition of Azora, Adial entered into a definitive agreement for a private placement financing with new and returning investors to raise up to $64 million in gross proceeds. The private placement is composed of (i) an initial upfront financing of approximately $32 million in gross proceeds (including the conversion of outstanding notes assumed in the acquisition) in exchange for pre-funded warrants to purchase 11,780,948 shares of Adial's common stock (without giving effect to any beneficial ownership limitations), representing a purchase price of $2.7489 for each pre-funded warrant sold at the initial closing, and (ii) the potential for up to an additional $32 million in gross proceeds in exchange for (x) pre-funded warrants to purchase up to 11,780,948 shares of Adial common stock and (y) common warrants to purchase up to 11,780,948 shares of Adial common stock at a combined purchase price of $2.7489 for each pre-funded warrant and common warrant sold at milestone closings. In addition, following Adial stockholder approval, each share of Series A non-voting convertible preferred stock issued in the acquisition will automatically convert into 1,000 shares of common stock and each pre-funded warrant and common warrant (if issued) sold in the private placement will become exercisable into common stock, subject to certain beneficial ownership limitations set by each holder.

As a result of the transactions, following Adial stockholder approval, and without giving effect to the funding of the milestone tranche of the financing, equity holders of Adial immediately prior to the acquisition will own approximately 7.7% of Adial's common stock, equity holders of Azora immediately prior to the acquisition will own approximately 51.0% of Adial's common stock and investors in the private placement financing including the conversion of outstanding notes will own approximately 41.3% of Adial's common stock, in each case, calculated on a fully-diluted, as-converted-to-common-basis (and without giving effect to any beneficial ownership limitations) using the treasury stock method and based on the implied equity values of Adial and Azora.