Form 8-K/A

8-K/A — ADIAL PHARMACEUTICALS, INC.

Accession: 0001213900-26-087439

Filed: 2026-08-11

Period: 2026-06-11

CIK: 0001513525

SIC: 2834 (PHARMACEUTICAL PREPARATIONS)

Item: Financial Statements and Exhibits

Documents

8-K/A — ea0299800-8ka1_adial.htm (Primary)

EX-23.1 — CONSENT OF CBIZ CPA'S P.C., INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR AZORA THERAPEUTICS, INC (ea029980001ex23-1.htm)

EX-99.3 — AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF AZORA THERAPEUTICS, INC. AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024 AND THE RELATED NOTES THERETO (ea029980001ex99-3.htm)

EX-99.4 — UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AZORA THERAPEUTICS, INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 AND THE RELATED NOTES THERETO (ea029980001ex99-4.htm)

EX-99.5 — UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF ADIAL PHARMACEUTICALS, INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND FOR THE YEAR ENDED DECEMBER 31, 2025, AND THE RELATED NOTES THERETO (ea029980001ex99-5.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K/A — AMENDMENT NO. 1 TO FORM 8-K

8-K/A (Primary)

Filename: ea0299800-8ka1_adial.htm · Sequence: 1

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0001513525

2026-06-11

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

Date of Report (date of earliest event reported):

June 11, 2026

Adial Pharmaceuticals, Inc.

(Exact name of registrant as specified in charter)

Delaware

(State or other jurisdiction of incorporation)

001-38323

82-3074668

(Commission File Number)

(IRS Employer

Identification No.)

4870 Sadler Road, Ste 300

Glen Allen, VA 23060

(Address of principal executive offices and

zip code)

(804) 487-8196

(Registrant’s telephone number including

area code)

(Former Name and Former Address)

Check the appropriate box below if the Form 8-K

filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock

ADIL

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

Indicate by check mark whether the registrant

is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of

the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by checkmark

if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards

provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

This Amendment No.1 on Form 8-K/A (this “Amendment”)

amends that Current Report on Form 8-K filed by Adial Pharmaceuticals, Inc., a Delaware corporation (the “Company”), with

the Securities and Exchange Commission (the “SEC”) on June 11, 2026 (the “Original Form 8-K”). The Original Form

8-K was filed to, among other things, report the Company’s acquisition (the “Merger”) of Azora Therapeutics, Inc., a

Delaware corporation (“Azora”), pursuant to that Agreement and Plan of Merger, dated June 11, 2026 (the “Merger Agreement”),

by and among the Company, Adial Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, Adial Second Merger

Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, and Azora.

In the Original Form 8-K, the Company stated its intention to file the historical financial statements of Azora and the pro forma financial

information required by parts (a) and (b) of Item 9.01 of Form 8-K not later than 71 calendar days after the date that the Original Form

8-K was required to be filed with the SEC. This Amendment amends the Original Form 8-K in order to include the required financial information,

which is filed as exhibits hereto and is incorporated herein by reference.

This Amendment should be read in conjunction with the Original Form 8-K. Except as set forth herein, no modifications have been made to

information contained in the Original Form 8-K, and the Company has not updated any information contained therein to reflect events that

have occurred since the date of the Original Form 8-K. The unaudited pro forma condensed combined financial information, and the related

notes, attached as Exhibit 99.3 to this Amendment have been presented for informational purposes only, as required by Form 8-K, and does

not represent or purport to represent actual financial positions or results of operations that the Company would have achieved had the

companies been combined as of the dates or during the periods presented, nor do they represent or purport to represent any anticipated

combined financial position or the future results of operations that the Company may achieve after the Merger.

In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended, the complete text of Item 9.01 (as amended) is included

herein.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The historical audited consolidated balance sheets

of Azora as of December 31, 2025 and 2024 and the related audited consolidated statements of operations and comprehensive loss, convertible

preferred stock and stockholders’ deficit, and cash flows for the years ended December 31, 2025 and 2024, and the notes related thereto,

are included as Exhibit 99.3 hereto and incorporated by reference into this Item 9.01(a).

The unaudited condensed consolidated financial

statements of Azora as of March 31, 2026 and 2025 and for the three months ended March 31, 2026 and 2025, and the related notes thereto,

are included as Exhibit 99.4 hereto and incorporated by reference into this Item 9.01(a).

(b) Pro forma financial information.

The Company’s unaudited pro forma condensed

combined balance sheet as of March 31, 2026, the unaudited pro forma condensed combined statement of operations for the three months ended

March 31, 2026, the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025, and the related

notes thereto, are included as Exhibit 99.5 hereto and incorporated by reference into this Item 9.01(b).

(d) Exhibits

The following

exhibits are furnished with this Current Report on Form 8-K:

Exhibit

Number

Exhibit Description

2.1*

Agreement and Plan of Merger, dated June 11, by and among Adial Pharmaceuticals, Inc., Adial First Merger Sub, Inc., Adial Second Merger Sub, LLC and Azora Therapeutics, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

3.1

Certificate of Designation of Series A Non-Voting Convertible Preferred Stock, dated June 11, 2026 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

4.1

Form of Pre-Funded Warrant (Financing) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

4.2

Form of Warrant (Financing) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

4.3

Form of Pre-Funded Warrant (Note Exchange) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

4.4

Form of Warrant (Note Exchange) (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.1*

Form of Securities Purchase Agreement, dated as of June 11, 2026, by and among Adial Pharmaceuticals, Inc. and each investor listed on Exhibit A thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.2*

Form of Exchange Agreement, dated as of June 11, 2026, by and among Adial Pharmaceuticals, Inc. and each note holder listed on Exhibit A thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.3

Form of Registration Rights Agreement, by and among Adial Pharmaceuticals, Inc. and the investors signatory thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.4

Amendment to Amended and Restated Employment Agreement between Adial Pharmaceuticals, Inc. and Cary J. Claiborne, effective June 11, 2026 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.5

Amendment to Employment Agreement between Adial Pharmaceuticals, Inc. and Tony Goodman, effective June 11, 2026 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

10.6

Amendment to Employment Agreement between Adial Pharmaceuticals, Inc. and Vinay Shah, effective June 11, 2026 (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

23.1

Consent of CBIZ CPAs P.C., independent registered public accounting firm for Azora Therapeutics, Inc.

99.1

Press Release issued on June 11, 2026 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

99.2

Investor Presentation, dated June 2026 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2026).

99.3

Audited consolidated financial statements of Azora Therapeutics, Inc. as of and for the years ended December 31, 2025 and December 31, 2024 and the related notes thereto.

99.4

Unaudited condensed consolidated financial statements of Azora Therapeutics, Inc. as of and for the three months ended March 31, 2026 and 2025 and the related notes thereto.

99.5

Unaudited pro forma condensed combined financial information of Adial Pharmaceuticals, Inc. as of and for the three months ended March 31, 2026 and for the year ended December 31, 2025, and the related notes thereto.

104

Cover Page Interactive Data File (the cover page XBRL tags are embedded within in the inline XBRL document)

Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide, on a supplemental basis, a copy of any omitted schedules and attachments to the Securities and Exchange Commission or its staff upon request.

SIGNATURES

Pursuant to the requirements of the Securities

Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 10, 2026

ADIAL PHARMACEUTICALS, INC.

By:

/s/ Cary J. Claiborne

Name:

Cary J. Claiborne

Title:

President and Chief Executive Officer

EX-23.1 — CONSENT OF CBIZ CPA'S P.C., INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR AZORA THERAPEUTICS, INC

EX-23.1

Filename: ea029980001ex23-1.htm · Sequence: 2

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

We consent to the incorporation by reference in

the Registration Statements on Form S-8 (File No. 333-290134, 333-283756, 333-276003, 333-267972, 333-248759, 333-233760, 333-226884 and

333-260304), Form S-3 (File No. 333-292110, 333-287679, 333-278652, 333-276496, 333-263037, 333-258048, 333-256621, 333-255352 and 333-261509),

and Form S-1 (File No. 333-287826, 333-283968, 333-275397, 333-256771, 333-251122, 333-239678, 333-229615, 333-272846, 333-230470, and

333-220368) of Adial Pharmaceuticals, Inc. of our report dated August 10, 2026, with respect to the consolidated financial statements of

Azora Therapeutics, Inc. for the years ended December 31, 2025 and 2024 appearing in this Current Report on Form 8-K/A dated August 10,

2026.

/s/ CBIZ CPAs P.C.

Melville, NY

August 10, 2026

EX-99.3 — AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF AZORA THERAPEUTICS, INC. AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024 AND THE RELATED NOTES THERETO

EX-99.3

Filename: ea029980001ex99-3.htm · Sequence: 3

Exhibit 99.3

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors’ Report

F-2

Consolidated Financial Statements as of and for the years ended December 31, 2025 and 2024:

Consolidated Balance Sheets

F-4

Consolidated Statements of Operations and Comprehensive Loss

F-5

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

F-6

Consolidated Statements of Cash Flows

F-7

Notes to Consolidated Financial Statements

F-8

F-1

Independent Auditors’ Report

To the Board of Directors and Stockholders of

Azora Therapeutics, Inc.

Opinion

We have audited the consolidated financial statements

of Azora Therapeutics, Inc. (the “Company”), which comprise the consolidated balance sheets as of December 31, 2025 and 2024,

and the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ deficit,

and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred

to as the “financial statements”).

In our opinion, the accompanying financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of their

operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United

States of America.

Basis for Opinion

We conducted our audits in accordance with

auditing standards generally accepted in the United States of America (“GAAS”). Our responsibilities under those standards

are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are

required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements

relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.

Substantial Doubt About the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has

incurred significant losses, needs to raise additional funds to meet its obligations to sustain its operations and has stated that substantial

doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions

and management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments

that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial

Statements

Management is responsible for the preparation

and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of

America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management

is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

F-2

Auditors’ Responsibilities for the

Audit of the Financial Statements

Our objectives are to obtain reasonable assurance

about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an

auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and

therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material

if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user

based on the financial statements.

In performing an audit in accordance with GAAS,

we:

● Exercise

professional judgment and maintain professional skepticism throughout the audit.

● Identify

and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit

procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

● Obtain

an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion

is expressed.

● Evaluate

the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well

as evaluate the overall presentation of the financial statements.

● Conclude

whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged

with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal

control related matters that we identified during the audit.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

Melville, NY

August 10, 2026

F-3

AZORA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

December 31,

2025

2024

Assets

Current assets:

Cash

$ 282

$ 675

Prepaid expenses and other current assets

245

Total current assets

290

920

Property and equipment, net

Other noncurrent assets

Total assets

$ 297

$ 921

Liabilities, convertible preferred stock and stockholders’ deficit

Current liabilites:

Accounts payable

$ 26

$ 57

Deferred grant liability

Accrued expenses and other current liabilities

459

Total current liabilities

485

120

Total liabilities

$ 485

$ 120

Commitments and contingencies (Note 11)

Series A-1 convertible preferred stock, $0.0001 par value, 11,191,152 shares authorized as of December 31, 2025 and 2024; 11,191,152 shares issued and outstanding as of December 31, 2025 and 2024; liquidation value of $5,596 as of December 31, 2025 and 2024

5,542

Series A-2 convertible preferred stock, $0.0001 par value, 6,783,587 shares authorized as of December 31, 2025 and 2024; 6,783,587 shares issued and outstanding as of December 31, 2025 and 2024; liquidation value of $2,764 as of December 31, 2025 and 2024

2,764

Series A-3 convertible preferred stock, $0.0001 par value, 1,082,443 shares authorized as of December 31, 2025 and 2024; 1,055,262 shares issued and outstanding as of December 31, 2025 and 2024; liquidation value of $581 as of December 31, 2025 and 2024

559

Total convertible preferred stock

8,865

Stockholders’ Deficit:

Common Stock, $0.0001 par value, 48,800,000 shares authorized as of December 31, 2025 and 2024; 22,857,534 shares issued and outstanding as of December 31, 2025 and 2024

Additional paid-in capital

107

Accumulated deficit

(9,363 )

(8,619 )

Accumulated other comprehensive income

201

456

Total Stockholders’ Deficit

(9,053 )

(8,064 )

Total liabilities, convertible preferred stock and stockholders’ deficit

$ 297

$ 921

The accompanying notes are an integral part

of these consolidated financial statements.

F-4

AZORA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

LOSS

(in thousands)

Year Ended December 31,

2025

2024

Operating expenses:

Research and development

$ 340

$ 588

General and administrative

660

762

Total operating expenses

1,000

1,350

Loss from operations

(1,000 )

(1,350 )

Other income (expense), net:

Interest income

Other income (expense), net

255

(316 )

Total other income (expense), net

256

(290 )

Net loss

$ (744 )

$ (1,640 )

Other comprehensive income (loss)

Foreign currency translation adjustment, net of taxes

(255 )

384

Total other comprehensive income (loss)

(255 )

384

Total comprehensive loss

$ (999 )

$ (1,256 )

The accompanying notes are an integral part

of these consolidated financial statements.

F-5

AZORA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands, except share and per share amounts)

Convertible

Preferred Stock

Additional

Accumulated

other

Total

Series

A-1

Series

A-2

Series

A-3

Common

Stock

Paid-In

Accumulated

comprehensive

Stockholders’

Amount

Capital

Deficit

income

(loss)

Deficit

Balance

at December 31, 2023

11,191,152

$ 5,542

6,783,587

$ 2,764

1,055,262

$ 559

22,849,982

$ 2

$ 84

$ (6,979 )

$ 72

$ (6,821 )

Stock-based

compensation expense

Vesting

of restricted stock

7,552

Foreign

currency translation adjustment

384

Net

loss

(1,640 )

Balance

at December 31, 2024

11,191,152

$ 5,542

6,783,587

$ 2,764

1,055,262

$ 559

22,857,534

$ 2

$ 97

$ (8,619 )

$ 456

$ (8,064 )

Stock-based

compensation expense

Foreign

currency translation adjustment

(255 )

Net

loss

(744 )

Balance

at December 31, 2025

11,191,152

$ 5,542

6,783,587

$ 2,764

1,055,262

$ 559

22,857,534

$ 2

$ 107

$ (9,363 )

$ 201

$ (9,053 )

The accompanying notes are an integral part

of these consolidated financial statements.

F-6

AZORA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2025

2024

Cash flows from operating activities:

Net loss

$ (744 )

$ (1,640 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Stock-based compensation expense

Realized and unrealized foreign exchange gain (loss)

(251 )

449

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

252

687

Other noncurrent assets

(7 )

Accounts payable

(31 )

Deferred grant liability

(4 )

(162 )

Accrued expenses

399

(168 )

Net cash used in operating activities

(375 )

(801 )

Effect of exchange rate changes on cash

(18 )

(27 )

Net decrease in cash

(393 )

(828 )

Cash at beginning of period

675

1,503

Cash at end of period

$ 282

$ 675

The accompanying notes are an integral part

of these consolidated financial statements.

F-7

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Azora Therapeutics,

Inc. (collectively with its wholly owned subsidiary, Azora Therapeutics Australia PTY LTD, the “Company”) was originally incorporated

on May 4, 2017 under the laws of the state of Delaware under the name Meya Pharmaceuticals, Inc. In March 2019, Meya Pharmaceuticals,

Inc. changed its name to Azora Therapeutics, Inc. The Company is a biopharmaceutical company focused on developing aryl hydrocarbon receptor

agonists to treat autoimmune diseases. The Company’s small molecule formulations are designed to rebalance the body’s natural

immune response mechanisms in order to treat serious inflammatory diseases.

Basis of Presentation and Consolidation

The accompanying consolidated

financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”)

and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated

financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have

been eliminated in consolidation.

Risks and Uncertainties

The Company is subject

to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, the outcome of

clinical trials, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technologies,

compliance with government regulations, ability to secure additional capital to fund operations, and potential delays associated with

the Company’s anticipated and planned trials.

There can be no assurance

that the Company will be able to successfully complete the development of, or receive regulatory approval for, any products developed,

and if approved, that any products will be commercially viable. Any products resulting from the Company’s current research and development

efforts will require significant additional research and development, including extensive preclinical and clinical testing and regulatory

approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel, infrastructure,

and extensive compliance reporting capabilities. The Company has not generated any revenue from the sale of any products to date. Even

if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant

revenue from product sales.

Merger and Financing

On June 11, 2026, Adial

Pharmaceuticals, Inc. (“Adial” or the “Acquirer”) completed the acquisition of the Company pursuant to a merger

agreement, with Azora surviving as a wholly owned subsidiary of Adial. At closing, in exchange for all shares of capital stock of the

Company, Adial issued 437,421 shares of common stock and 12,930.617 shares of Series A Non-Voting Convertible Preferred Stock, each convertible

into 1,000 shares of common stock, subject to certain conditions, including stockholder approval. The Company’s outstanding stock

options were assumed and converted into options to purchase an aggregate of 1,177,782 shares of Adial’s common stock, also subject

to stockholder approval.

Concurrently with the

Closing, Adial entered into the Purchase Agreement with certain purchasers (the “PIPE Investors”), pursuant to which Adial agreed

to issue Initial Closing Pre-Funded Warrants, Milestone Pre-Funded Warrants, and Milestone Incentive Warrants in a private placement financing

(the “PIPE Financing”). At the Initial Closing on June 12, 2026, Adial issued Initial Closing Pre-Funded Warrants to purchase

an aggregate of 9,749,345 shares of its common stock at a price of $2.7489 per Initial Closing Pre-Funded Warrant (the “Purchase

Price”), for gross proceeds of approximately $26.8 million. The PIPE Investors may also participate in a future Milestone Closing,

pursuant to which Adial may issue Milestone Pre-Funded Warrants to purchase up to an aggregate of 9,749,345 shares of its common stock

and Milestone Incentive Warrants to purchase up to an aggregate of 9,749,345 shares of its common stock upon the occurrence of specified

milestone events, resulting in aggregate additional proceeds of up to approximately $26.8 million.

F-8

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Each Pre-Funded Warrant

has an exercise price of $0.001 per share, does not expire until exercised in full, and is exercisable upon receipt of stockholder approval,

subject to certain beneficial ownership limitations. The Milestone Incentive Warrants have an exercise price equal to the Purchase Price,

expire five years from issuance, and are subject to substantially similar stockholder approval and beneficial ownership provisions.

In connection with

the Merger, Adial also facilitated the extinguishment of $5.5 million of Azora convertible promissory notes through exchange agreements,

whereby noteholders received pre-funded warrants to purchase 2,031,603 shares of common stock and may participate in future milestone

financings on similar terms as PIPE Investors. The former noteholders are also entitled to participate in Milestone Closings to purchase

Milestone Pre-Funded Warrants and Milestone Incentive Warrants to purchase up to an aggregate of 2,031,603 shares of Adial common stock

each, on substantially the same terms as the PIPE Investors.

Liquidity and Going Concern

The Company has evaluated

whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to

continue as a going concern within one year after the date the consolidated financial statements are available to be issued.

To date, the Company

has funded its operations primarily with proceeds from the issuance and sale of convertible preferred stock and convertible promissory

notes and the receipt of grant funding. As of December 31, 2025, the Company has raised an aggregate of $9.4 million in net proceeds through

the sale of convertible preferred stock and convertible promissory notes and the receipt of grant funding. The Company

has incurred annual net operating losses in every year since inception, including net losses of $0.7 million and $1.6 million for the

years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had cash of $0.3 million and an accumulated

deficit of $9.4 million. The Company expects its operating losses to continue into the foreseeable future as it continues to pursue its

research and development efforts.

The Company’s

ability to continue as a going concern is dependent upon the ability to raise additional debt or equity capital. There can be no assurance

that such capital will be available in sufficient amounts or on terms acceptable to the Company. These factors raise substantial doubt

about the Company’s ability to continue as a going concern. Based upon the Company’s current plans, management believes there

currently is insufficient financial resources to fund the Company’s operations for at least twelve months from the date the 2025

consolidated financial statements are available to be issued. As such, there is substantial doubt about the Company’s ability to

continue as a going concern. To address the Company’s capital needs, the Company will continue to actively pursue additional equity

or debt financing. Adequate financing opportunities might not be available to the Company, when and if needed, on acceptable terms or

at all. If the Company is unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances,

the Company’s operating results and prospects will be adversely affected. The accompanying consolidated financial statements have

been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course

of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of

recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

F-9

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of

consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Management considers many factors in selecting appropriate financial accounting policies and in developing the estimates and assumptions

that are used in the preparation of these consolidated financial statements. Management must apply significant judgment in this process.

In addition, other factors may affect estimates including expected business and operational changes, sensitivity and volatility associated

with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The

estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select

an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those

estimated amounts used in the preparation of the consolidated financial statements. Areas

of the consolidated financial statements where estimates may have the most significant effect include, but are not limited to,

accrued research and development expenses, determination of the fair value of

stock-based compensation expense, and the fair value of common stock.

Concentrations of Credit Risk

Financial instruments that

potentially subject the Company to credit risk consist principally of cash. The Company places its cash with high credit quality financial

institutions. At times, cash may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.

Fair Value of Financial Instruments

ASC Topic 820, Fair

Value Measurement (“ASC 820”) identifies fair value as the price that would be received to sell an asset or paid to transfer

a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between

market participants on the measurement date. In determining fair value, the use of various valuation approaches, including market, income,

and cost approaches, is permitted.

A fair value hierarchy

has been established based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market

data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about

how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure

fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value

hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used

to measure fair value.

As a basis for considering

market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among

the following:

● Level 1 – Quoted market prices in active markets;

● Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

● Level 3 – Unobservable inputs in which there is little or no market data.

To the extent that

the valuation is based on inputs that are less observable or unobservable in the market, the determination of fair value requires more

judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized

in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant

to the fair value measurement.

The carrying amounts

of the Company’s cash, prepaid expenses and other current assets, other non-current assets, accounts payable, and accrued expenses

approximate their fair values due to their short-term nature.

F-10

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment, net

Property and equipment

are stated at cost, less accumulated depreciation. Depreciation expense is computed on a straight-line basis over the estimated useful

lives of the assets. The estimated useful lives are as follows:

Estimated

Useful Life

Computer

software

years

Furniture

and fixtures

years

Laboratory

equipment

years

Leasehold

improvements

Shorter

of the useful life of the asset or the life of the lease

Costs for capital

assets not yet placed in service are capitalized and depreciation starts once placed into service. Upon retirement or sale, the cost of

assets disposed of, and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included

in operating expenses. Expenditures for repairs and maintenance are expensed as incurred.

Patent Costs

Patent-related costs

incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery

of the expenditure. Amounts incurred are classified as research and development expenses in the accompanying consolidated statements of

operations and comprehensive loss.

Impairment of Long-Lived Assets

The Company accounts

for long-lived assets in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment (“ASC 360”).

ASC 360 requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors that the Company considers in deciding

when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative

industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed

to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the

use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted

future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on

the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. During the years

ended December 31, 2025 and 2024, the Company has not recorded any impairment losses on long-lived assets.

Research and Development Costs

Research and development

expenses consist of expenses incurred in performing research and development activities such as employee payroll, stock-based compensation,

costs of funding research performed by third parties that conduct research and development and preclinical activities on the Company’s

behalf, the cost of purchasing lab supplies and non-capital equipment used in preclinical activities and in manufacturing preclinical

study materials, consulting, contract research, license and milestones fees, and other related costs, and are expensed as incurred.

Grants

Grants from non-profit

entities awarded to the Company for research and development are outside the scope of ASC 606 and are accounted for under ASC 832.

The Company has applied for reimbursement of expenditures for certain qualified research and development expenditures. The Company recognizes

grants when there is reasonable assurance that the Company will comply with the conditions attached to the grant arrangement and the grant

will be received. Grants related to reimbursements of research and development expenditures are recognized as a reduction of the associated

research and development expense in the consolidated statements of operations and comprehensive loss.

F-11

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accrued Research and Development Costs

The Company has entered

into various research and development contracts. The payments under these contracts are recorded as research and development expenses

as incurred. The Company records accrued expenses for estimated ongoing research costs. When evaluating the adequacy of the accrued expenses,

the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. Judgments

and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s

estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

Income Taxes

The Company’s

provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect the Company’s

best assessment of estimated future taxes to be paid. Significant judgments and estimates based on interpretations of existing tax laws

or regulations in the United States are required in determining the Company’s provision for income taxes. Changes in tax laws, statutory

tax rates, and estimates of future taxable income could impact the deferred tax assets and liabilities provided for in the financial statements

and would require an adjustment to the provision for income taxes.

The Company accounts

for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected

future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred

tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and

liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets

and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will

be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely

than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge

to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and

considering prudent and feasible tax planning strategies.

The Company accounts

for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit

to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination

by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine

the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount

that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects

of any resulting tax reserves, or unrecognized tax benefits, which are considered appropriate as well as the related net interest and

penalties.

Stock-Based Compensation

The Company’s

stock-based compensation program allows for grants of stock options, restricted stock awards and restricted stock units. Grants are awarded

to employees and non-employees, including directors.

The Company accounts

for stock-based compensation in accordance with ASC Topic 718, Compensation- Stock Compensation (“ASC 718”). ASC 718

requires all stock-based payments to employees and non-employees to be recognized as expense in the consolidated statements of operations

and comprehensive loss based on their fair values. The Company estimates the fair value of options granted using the Black-Scholes option

pricing model (“Black-Scholes”) for stock option grants. The fair value of the Company’s common stock is used to determine

the fair value of restricted stock awards and restricted stock units.

F-12

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company recognizes

stock-based compensation expense over the requisite service period of the individual award, generally equal to the vesting period, and

uses the straight-line method to recognize stock-based compensation. The Company recognizes stock-based compensation for performance awards

only when it is probable that the performance condition will be met. Forfeitures are accounted for in the period in which they occur.

The Black-Scholes option pricing

model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected

term of the option, (iii) the risk-free interest rate, (iv) expected dividends, and (v) fair value of common stock. The Company

bases its computation of expected stock price volatility on the historical volatility of a representative group of public companies

with similar characteristics to the Company, including stage of product development and life science industry focus. The historical

stock price volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the

simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected

term for options granted to employees and non-employees, whereby the expected term equals the arithmetic average of the vesting term

and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based

on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend

yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common

stock. Given the absence of a public trading market for the Company’s shares of common stock, the board of directors exercises

their judgment and considers a number of objective and subjective factors to determine the best estimate of the fair value of the

Company’s shares of common stock, including timely third-party valuations. These third-party valuations are performed in

accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation

Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation, or the Practice Aid.

Convertible Preferred Stock

In accordance with

ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), preferred stock issued with redemption provisions

that are outside of the control of the Company or that contains certain redemption rights in a deemed liquidation event is required to

be presented outside of stockholders’ deficit on the face of the balance sheet. The Company’s convertible preferred stock

contains contingent redemption rights in a deemed liquidation event, accordingly the Company has elected to present it outside of stockholders’

deficit.

Comprehensive Loss

Comprehensive loss

includes net loss as well as other changes in stockholders’ deficit that result from transactions and economic events other than

those with stockholders. For the years ended December 31, 2025 and 2024, the Company’s only element of other comprehensive loss

was foreign currency translation adjustments.

Interest Income

Interest income is

recorded when earned on cash balances and is recognized separately on the consolidated statements of operations and comprehensive loss.

Foreign Currency Translation

The Company’s

reporting currency is U.S. dollars (“USD”). The functional currency of Azora Therapeutics, Inc is USD. The functional currency

of the Company’s foreign wholly owned subsidiary is the local currency. Transactions denominated in other than the functional currencies

are remeasured into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities are translated

into USD at the exchange rate in effect on the balance sheet date. Equity balances, other than accumulated deficit, are translated at

historical exchange rates. Income and expenses are translated at the average exchange rate in effect during the period. Realized translation

gains and losses are recorded as foreign currency translation, which is included in the consolidated statements of operations and comprehensive

loss. Adjustments resulting from the translation of financial statements are reflected as a component of stockholders’ deficit in

accumulated other comprehensive income. Gains and losses from foreign currency transactions, which are included in other income (expense),

net, were $0.3 million and $0.5 million, for the years ended December 31, 2025, and 2024, respectively.

Contingencies

From time to time,

the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for

loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no

amount within the range is a better estimate, the minimum amount of the range is recorded as a liability on the Company’s consolidated

balance sheets. The Company does not accrue contingent losses that, in its judgment, are considered to be reasonably possible, but not

probable; however, it will disclose the range of reasonably possible losses.

F-13

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Recent Accounting Pronouncements

Recently Adopted

In December 2023, the

FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures. (“ASU 2023-09”). ASU 2023-09

provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation

and incomes taxes paid information. For public business entities (“PBEs”), the amendments are effective for annual periods

beginning after December 15, 2024, with early adoption permitted. For entities other than PBEs, the requirements will be effective for

annual periods beginning after December 15, 2025. Entities may apply the amendments prospectively or may elect retrospective application.

The Company early adopted this ASU on January 1, 2024, on a prospective basis, which only impacts the Company’s income tax disclosures

with no impact to its operations, cash flows, or financial condition.

In December 2025, the

FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by

Business Entities. This ASU establishes guidance on the recognition, measurement, presentation, and disclosure of government grants

received by business entities. The guidance defines a government grant as a transfer of a monetary asset or a tangible nonmonetary asset

from a government to a business entity other than in an exchange transaction and excludes transactions within the scope of other U.S.

GAAP. Under the ASU, government grants are classified as either grants related to an asset or grants related to income, and recognition

is permitted only when it is probable that the entity will comply with the conditions attached to the grant and that the grant will be

received. The ASU permits alternative presentation approaches depending on the nature of the grant and requires disclosures regarding

the nature of the grant, affected financial statement line items, and significant terms and conditions. The ASU is effective for public

business entities for annual reporting periods beginning after December 15, 2028, including interim periods within those annual reporting

periods. Early adoption is permitted, and the standard may be applied on a modified prospective, modified retrospective, or full retrospective

basis. The Company elected to early adopt ASU 2025-10 as of January 1, 2025 on a full retrospective basis and noted no impact to its operations,

cash flows, or financial condition.

Recently Issued

In November 2024, the

FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation

of Income Statement Expenses (“ASU 2024-03”), which requires entities to disclose additional information about specific expense

categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and

for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied retrospectively

or prospectively. The Company is currently evaluating the effect of this update on its financial statements and related disclosures.

4. Prepaid Expenses and Other Current Assets

As of December 31, 2025 and 2024, prepaid expenses and other

current assets consisted of the following (in thousands):

December 31,

2025

2024

Prepaid research and development expenses

$ -

$ 71

Prepaid employee benefits

Prepaid insurance

Other prepaid expenses

Income tax benefit receivable

144

Total

$ 8

$ 245

5. Accrued Expenses and Other Current Liabilities

As of December 31, 2025 and 2024, accrued expenses and other

current liabilities consisted of the following (in thousands):

December 31,

2025

2024

Accrued research and development expenses

$ 11

$ 32

Accrued professional expenses

Accrued personnel expenses

445

Accrued other expenses

Other current liabilities

Total

$ 459

$ 59

F-14

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. Grant Income

In November 2023,

the Company entered into a grant agreement with the Kenneth Rainin Foundation under which the Company was awarded $0.3 million to reimburse

specific research and development expenses incurred in support of a novel oral small-molecule program for ulcerative colitis. The grant

funds were required to be distributed or committed within 12 months of the grant date, and the Company received the full $0.3 million

during the year ended December 31, 2023. During the years ended December 31, 2023 and 2024, the Company incurred reimbursable research

and development expenses of $0.1 million and $0.2 million, respectively, fully utilizing the grant proceeds. As of December 31, 2024,

no deferred grant liability remained related to this grant.

In October 2024, the

Company entered into a second grant agreement with the Kenneth Rainin Foundation under which the Company was awarded an additional $0.3

million under similar terms to reimburse research and development expenses associated with the same program. The Company received the

full $0.3 million in grant funds during the year ended December 31, 2024. During the years ended December 31, 2024 and 2025, the Company

incurred reimbursable research and development expenses of $0.3 million and $4 thousand, respectively. As of December 31, 2025, the full

amount of the second grant had been utilized, and no deferred grant liability remained.

Reimbursements under

both grant agreements are recorded as reductions of the related research and development expenses in the Company’s consolidated

statements of operations and comprehensive loss. Any grant proceeds received in advance of eligible expenditures are recorded as a deferred

grant liability in the consolidated balance sheets.

7. Convertible Preferred Stock

As of December 31,

2025 and 2024, the Company’s certificate of incorporation, as amended and restated (the “Amended and Restated Certificate

of Incorporation”) authorized the Company to issue 19,057,182 shares of preferred stock, at $0.0001 par value per share.

Series A-1

On June 1, 2021, the

Company entered into the Series A preferred stock purchase agreement (the “Series A Purchase Agreement”) with several investors

in which the Company issued and sold 9,941,152 shares of Series A-1 convertible preferred stock (“Series A-1”, the

“Series A Initial Issuance”), with a par value of $0.0001, at a purchase price of $0.50 per share for total proceeds

of $4.9 million, net of issuance costs of $0.1 million. The Series A Purchase Agreement allows for one additional sale of up to 11,191,152 shares

of Series A-1 (“Series A-1 Additional Issuance”) to one or more purchasers within 90 days of the

Series A Initial Issuance. An additional 1,250,000 shares of Series A-1 were issued at $0.50 per share on August 30, 2021,

as part of the Series A-1 Additional Issuance, for total proceeds of $0.6 million.

Series A-2

From March through

June 2021, the Company issued convertible promissory notes (the “2021 Notes”) in the principal amount of $2.7 million. In

June 2021, concurrently with the Series A Purchase Agreement, all of the outstanding principal plus $0.1 million of accrued interest relating

to the 2021 Notes was automatically converted into 6,783,587 shares of Series A-2 convertible preferred stock (“Series A-2”),

with a par value of $0.0001, at a purchase price of $0.40750 per share.

Series A-3

On August 2, 2023, the

Company entered into the Series A-3 preferred stock purchase agreement (the “Series A-3 Purchase Agreement”) with several

investors in which the Company issued and sold 1,055,262 shares of Series A-3 convertible preferred stock (“Series A-3”),

with a par value of $0.0001, at a purchase price of $0.5510 per share for total proceeds of $0.6 million, net of issuance costs of

$22 thousand.

F-15

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table

presents information about the Series A-1, Series A-2, and Series A-3 (collectively the “Convertible Preferred Stock”) as

of December 31, 2025 and 2024 (in thousands except share and per share amounts):

December 31, 2025

Preferred Stock Authorized

Preferred Stock Issued and Outstanding

Carrying Value

Liquidation Value

Common Stock Issuable Upon Conversion

Series A-1 Convertible Preferred Stock

11,191,152

$ 5,542

$ 5,596

11,191,152

Series A-2 Convertible Preferred Stock

6,783,587

2,764

6,783,587

Series A-3 Convertible Preferred Stock

1,082,443

1,055,262

559

581

1,055,262

Total

19,057,182

19,030,001

$ 8,865

$ 8,941

19,030,001

December 31, 2024

Preferred Stock Authorized

Preferred Stock Issued and Outstanding

Carrying Value

Liquidation Value

Common Stock Issuable Upon Conversion

Series A-1 Convertible Preferred Stock

11,191,152

$ 5,542

$ 5,596

11,191,152

Series A-2 Convertible Preferred Stock

6,783,587

2,764

6,783,587

Series A-3 Convertible Preferred Stock

1,082,443

1,055,262

559

581

1,055,262

Total

19,057,182

19,030,001

$ 8,865

$ 8,941

19,030,001

The following is a

description of the rights of the holders of the Convertible Preferred Stock as of December 31, 2025:

Liquidation Rights

In the event of any

voluntary or involuntary liquidation, dissolution, or winding-up of the affairs of the Company, including a deemed liquidation event,

each holder of a share of the Convertible Preferred Stock shall be entitled to receive, prior and in preference to any distribution of

any of the assets or surplus funds of the Company to the holders of common stock, an amount equal to the greater of the original issuance

price plus any declared but unpaid dividends or the amount that would be payable if all classes of stock had converted to common.

In the event of a deemed

liquidation event, if the assets of the Company available for distribution are insufficient to pay the holders of Convertible Preferred

Stock in the full amount they are entitled, the holders of Convertible Preferred Stock shall share ratably in any distribution of the

assets available for distribution in proportion to the number of preferred shares that they hold.

Each of the following

events shall be considered a Deemed Liquidation Event (“Deemed Liquidation Event”); a merger, consolidation, the sale, lease,

transfer, exclusive license or other disposition of all or substantially all of this Company’s assets/intellectual property or the

sale or transfer of stock representing a more than 50% of the voting power of the voting securities of the Company.

F-16

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Redemption

The Convertible Preferred

Stock do not contain any mandatory redemption features, except for the contingent redemption upon the occurrence of a Deemed Liquidation

Event.

Conversion

Each share of Convertible

Preferred Stock is convertible at the option of the holder, at any time after the date of issuance and without the payment of any additional

consideration, into that number of shares of common stock as is determined by dividing the original issuance price of $0.50 per share

for Series A-1, $0.4075 per share for Series A-2, and $0.5510 per share for Series A-3 by the conversion price in effect at the time of

conversion. As of December 31, 2025 and 2024, the conversion prices were equal to the original issuance prices.

All outstanding shares

of Convertible Preferred Stock are automatically convertible based upon either: (i) the written consent of holders of a majority of all

outstanding preferred stock , voting as a single class and on an as converted basis, (ii) the closing of a sale of shares of common stock

to the public in a firm commitment underwritten public offering resulting in at least $25.0 million of gross proceeds or market capitalization

of the Company of at least $150.0 million, or (iii) the effectiveness of a registration statement in connection with a listing on a national

securities exchange, provided that within 30 days the Company obtains an independent third party valuation demonstrating market capitalization

of the Company of at least $150.0 million.

Voting Rights

The holders of Convertible

Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which each share of preferred stock

is convertible at the time of such vote. The holders of Convertible Preferred Stock vote together with the common stockholders as a single

class.

Protective Rights

Holders of Convertible

Preferred Stock are entitled to protective rights, which require the affirmative vote of a majority of the Convertible Preferred Stock

stockholders for certain corporate actions, which include, but are not limited to the sale of the Company, its liquidation, the acquisition

of assets or a business, and the authorization of additional shares of the Company’s capital.

Dividend Rights

The holders of Convertible

Preferred Stock are entitled to receive, when and if declared by the board of directors, noncumulative dividends at the annual rate of

6 % of the original issuance price per share of the Convertible Preferred Stock, subject to certain adjustments. No dividends

have been declared through December 31, 2025.

F-17

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. Common Stock

As of December 31,

2025 and 2024, the Company is authorized to issue up to 48,800,000 shares of common stock, with a $0.0001 par value per share.

The holders of common

stock are entitled to one vote per share of common stock owned and are entitled to dividends, when and if declared by the Company’s

board of directors. The voting, dividend, and liquidation rights of the holders of common stock are subject to and qualified by the rights

of the Convertible Preferred Stock stockholders.

The Company has reserved

shares of common stock for the conversion or exercise of the following securities:

December 31,

2025

2024

Redeemable convertible preferred stock

19,030,001

Options to purchase common stock

1,224,772

1,574,772

Common stock reserved for future issuance under the 2017 Plan

3,312,147

2,962,147

Total

23,566,920

9. Stock-based Compensation

2017 Equity Incentive Plan

The Company authorized

the 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which permits the grant of stock options and restricted common

stock to its employees for up to 4,869,453 shares of common stock. All option awards are granted with an exercise price equal to or greater

than the market price of the Company’s common stock at the date of grant. Option awards generally vest over four years, and the

vested options are exercisable over a period no longer than 10 years after the grant date. Certain option and restricted common stock

awards provide for accelerated vesting if there is a change in control as defined in the 2017 Plan. As of December 31, 2025, there were

3,312,147 options available for future grant under the 2017 Plan.

Stock Options

The

fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. There were no options

granted during the year ended December 31, 2025. The weighted-average assumptions used are noted in the following table:

December 31,

2024

Fair value of common stock

$ 0.26

Risk-free interest rate

4.00 %

Expected term (in years)

5.25

Expected volatility

103.77 %

Expected dividend yield

0.00 %

F-18

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

A summary of option

activity under the 2017 Plan for the year ended December 31, 2025 is presented below:

Number of Shares

Weighted-Average

Exercise Price

Weighted-Average

Remaining

Contractual Term

(in years)

Aggregate

Intrinsic

Value

(in thousands)

Outstanding at December 31, 2024

1,574,772

$ 0.24

4.76

$ 86

Granted

$ -

Exercised

$ -

Cancelled or forfeited

(350,000 )

$ 0.26

Outstanding at December 31, 2025

1,224,772

$ 0.23

6.12

$ 86

Vested and expected to vest as of December 31, 2025

1,224,772

$ 0.23

6.12

$ 86

Vested and exercisable as of December 31, 2025

1,122,721

$ 0.21

5.97

$ 85

The weighted-average

grant date fair value of options granted during the year ended December 31, 2024 was $0.21.

Restricted Common Stock

From 2017 through

2020, certain of the Company’s founders and consultants were granted shares of restricted common stock in exchange for the payment

of the fair value of the restricted stock granted, accordingly the grant date fair value of the restricted common stock was zero. The

awards typically vest ratably over a four-year period with 25% of the awards subject to a cliff vest after 1 year of grant or ratably

over a four-year period with 25% of the awards vesting immediately. The restricted stock was fully vested in September 2024. There was

no stock-based compensation expense recognized for restricted stock awards for the years ended December 31, 2025 and 2024.

Stock-Based Compensation Expense

Stock-based compensation

recognized was classified in the consolidated statements of operations and comprehensive loss as follows (in thousands):

Year Ended December 31,

2025

2024

Research and development

$ 4

General and administrative

Total

$ 10

$ 13

As of December 31,

2025, there was $13 thousand of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average

period of approximately 4 months.

F-19

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. Income Taxes

The components of net

loss before income tax expense are as follows (in thousands):

Year Ended December 31,

2025

2024

Loss from continuing operations before income tax expense (benefit)

U.S. Federal

$ (573 )

$ (994 )

Foreign

(171 )

(646 )

Total

$ (744 )

$ (1,640 )

Azora Therapeutics

Australia PTY LTD filed a final tax return for the taxable year ended December 31, 2025 and has ceased operations, which accounts for

a majority of the movement between tax years 2025 and 2024. The reconciliation of the Company’s statutory tax rate and effective tax rate

is as follows (in thousands):

Year Ended December 31,

2025

2024

Amount

Percent

Amount

Percent

Pretax loss

$ (744 )

$ (1,640 )

US federal statutory tax rate

(156 )

21.0 %

(344 )

21.0 %

Foreign tax effects:

Australia:

Research and development incentive income

0.0 %

(46 )

2.8 %

Research and development accounting expenditure add-back

0.0 %

106

(6.5 %)

Changes in valuation allowance

(233 )

31.3 %

133

(8.1 %)

Foreign net operating loss write-off

284

(38.2 %)

0.0 %

Foreign rate differential

(15 )

2.0 %

(57 )

3.5 %

Tax credits:

Federal research and development credit

(39 )

5.2 %

(56 )

3.4 %

Changes in valuation allowance

211

(28.4 %)

170

(10.4 %)

Unrealized gain/(loss)

(53 )

7.1 %

(5.7 %)

Other nontaxable or nondeductible items

(0.1 %)

0.0 %

$ -

(0.0 %)

$ -

0.0 %

The Company’s

effective tax rate differs from the statutory rate primarily due to continued losses and the maintenance of a full valuation allowance

on deferred tax assets, resulting in zero income tax expense for the year.

F-20

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The components of the

Company’s deferred tax assets and liabilities are as follows (in thousands):

Year Ended December 31,

2025

2024

Deferred tax assets

Other

$ 31

$ 28

Organizational costs

Capitalized research and development

231

311

Accrued expenses

124

Net operating loss

834

909

Tax credits

246

207

Total deferred tax assets

1,468

1,460

Valuation allowance

(1,468 )

(1,460 )

Total deferred tax assets, net of valuation allowance

$ -

As of December 31,

2025 and 2024, the Company had $2.3 million and $1.7 million, respectively, of U.S. federal net operating loss carryforwards, which have

an unlimited carryforward period. As of December 31, 2025 and 2024, the Company had $4.9 million and $4.5 million, respectively, of state

net operating loss carryforwards, which begin to expire in 2039.

As of December 31,

2025 and 2024, the Company had $0.2 million and $0.1 million, respectively, of U.S. federal research and development tax credits that

begin to expire in 2039. As of December 31, 2025 and 2024, the Company had $0.1 million and $0.1 million, respectively, of state research

and development tax credits that can be carried forward indefinitely.

The future realization

of the tax benefits from existing temporary differences and tax attributes ultimately depends on the existence of sufficient taxable income.

The Company assesses the realizability of its deferred tax assets at each balance sheet date. In assessing the realization of its deferred

tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company considers the projected future taxable income, expected reversal of existing deferred tax liabilities, and tax planning strategies

in making this assessment. After consideration of all available evidence, both positive and negative, the Company determined that it is

not more likely than not that its net deferred tax assets will be realized in the foreseeable future. As a result, the Company increased

its valuation allowance by less than $0.1 million as of December 31, 2025.

The Company provides

for U.S. Federal, state, and applicable foreign income and withholding taxes on the financial reporting basis over the tax basis of its

foreign subsidiary investment because the Company has the intentions and ability to indefinitely reinvest the undistributed earnings of

its foreign subsidiaries. As a result, deferred taxes have not been recorded for the outside basis differences in its foreign subsidiary

as of December 31, 2025 to the extent such differences are expected to result in future taxable income upon repatriation. The Company

reviews its ability and intentions to indefinitely reinvest its foreign earnings at each balance sheet.

The future realization

of the Company’s net operating loss carryforwards and other tax attributes may also be limited by the change in ownership rules under

the U.S. Internal Revenue Code Section 382. Under Section 382, if a corporation undergoes an ownership change (as defined), the corporation’s

ability to utilize its net operating loss carryforwards and other tax attributes to offset income may be limited. The Company has not

completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes.

F-21

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company accounts

for uncertainty in income taxes in the consolidated financial statements by applying a two-step process to determine the amount of tax

benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external

examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed

as the amount of benefit to recognize in the consolidated financial statements. The amount of benefit that may be used is the largest

amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the

effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest

and penalties. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense

within its consolidated statements of operations. As of December 31, 2025 and 2024, the Company has not identified any material uncertain

tax positions.

The Company files income

tax returns in the US and Australia as these are the major jurisdictions subject to tax examination by local tax authorities. Azora Therapeutics

Australia PTY LTD is under audit by the Australian Taxation Office (ATO) for its refundable research and development credit. The Company

does not believe the ATO’s preliminary position will result in material payments, accruals, or deviation from its tax positions.

Because the offset is refundable regardless of the entity’s tax position, it is accounted for as income rather than as an income tax benefit.

As a result, the research and development tax offset that is under audit by the ATO is not an income tax matter and is not governed by

ASC Topic 740, Income Taxes.

The Company is not

aware of any issues under review that could result in material payments, accruals, or deviation from its tax positions. To the extent

the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination

by local tax authorities to the extent utilized in a future period.

11. Commitments and Contingencies

Legal Proceedings

The Company is not currently a party to and is not aware of

any legal proceedings.

Other Contracts

The Company is party

to various contracts with contract research organizations and contract manufacturers that generally provide for termination on notice,

with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

There are no contractual

obligations arising from these arrangements as of December 31, 2025.

F-22

AZORA THERAPEUTICS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Indemnification Agreements

As permitted under

Delaware law, the Company indemnifies its officers, directors, and employees for certain events or occurrences while the officer or director

is, or was, serving at the Company’s request in such capacity. The term of the indemnification is for the officer’s or director’s

lifetime. Further, in the ordinary course of business the Company may provide indemnification of varying scope and terms to vendors, lessors,

business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such

agreements or from intellectual property infringement claims made by third parties. The maximum potential amount of future payments the

Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date however, the Company has

not incurred any material costs as a result of such indemnifications nor experienced any losses related to them. As of December 31, 2025

and 2024, the Company was not aware of any claims under indemnification arrangements and does not expect significant claims related to

these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible; therefore, no related

reserves were established.

12. Related Parties

The

Company’s Chief Executive Officer and Chief Operating Officer are members of the Company’s board of directors and together

with their immediate families, hold approximately 36% and 25%, respectively, of the Company’s outstanding equity at December 31,

2025, and approximately 30% and 19%, respectively, of the Company’s outstanding equity at December 31, 2024. As a result of their

ownership interests and management roles, the Chief Executive Officer and Chief Operating Officer have significant influence over the

Company’s management, operations, and strategic direction, including matters subject to board of director approval.

material related party transactions requiring disclosure occurred during the years ended December 31, 2025 and 2024.

13. Subsequent Events

The

Company evaluated subsequent events through August 10, 2026 the date these financial statements were issued, for events

requiring recording or disclosure in the financial statements for the year ended December 31, 2025. Except as noted below and in

Note 1, the Company concluded that no subsequent events have occurred that require disclosure.

2026 Convertible Promissory Notes

Beginning in March 2026, the Company issued

convertible promissory notes (the “ 2026 Notes”) to various investors for a total principal amount of $4.0 million with a

stated interest rate of 8.0% per annum and a maturity date of March 16, 2028. In May 2026, the Company completed the final closing of

the 2026 Notes on the same terms as the initial issuances of the 2026 Notes for an aggregate principal amount of $1.5 million. These Notes

were subsequently extinguished as a part of the PIPE Financing discussed in Note 1.

F-23

EX-99.4 — UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AZORA THERAPEUTICS, INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 AND THE RELATED NOTES THERETO

EX-99.4

Filename: ea029980001ex99-4.htm · Sequence: 4

Exhibit

99.4

INDEX

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated

Financial Statements:

Condensed Consolidated Balance Sheets

F-2

Condensed Consolidated Statements of Operations and Comprehensive Loss

F-3

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

F-4

Condensed Consolidated Statements of Cash Flows

F-5

Notes to Condensed Consolidated Financial Statements

F-6

F-1

AZORA

THERAPEUTICS, INC.

CONDENSED

CONSOLIDATED BALANCE SHEETS

(in

thousands, except share and per share amounts)

March 31,

December 31,

2026

2025

Assets

Current assets:

Cash

$ 4,216

$ 282

Prepaid

expenses and other current assets

Total

current assets

4,227

290

Other

noncurrent assets

Total

assets

$ 4,234

$ 297

Liabilities,

convertible preferred stock and stockholders’ deficit

Current liabilites:

Accounts

payable

$ 27

$ 26

Accrued

expenses and other current liabilities

594

459

Total

current liabilities

621

485

Convertible

promissory notes, includes related party amounts of $0.1 million as of March 31, 2026

4,011

Total

liabilities

$ 4,632

$ 485

Commitments

and contingencies (Note 11)

Series

A-1 convertible preferred stock, $0.0001 par value, 11,191,152 shares authorized as of March 31, 2026 and December 31, 2025; 11,191,152

shares issued and outstanding as of March 31, 2026 and December 31, 2025; liquidation value of $5,596 as of March 31, 2026 and December

31, 2025.

5,542

Series

A-2 convertible preferred stock, $0.0001 par value, 6,783,587 shares authorized as of March 31, 2026 and December 31, 2025; 6,783,587

shares issued and outstanding as of March 31, 2026 and December 31, 2025; liquidation value of $2,764 as of March 31, 2026 and December

31, 2025.

2,764

Series

A-3 convertible preferred stock, $0.0001 par value, 1,082,443 shares authorized as of March 31, 2026 and December 31, 2025; 1,055,262

shares issued and outstanding as of March 31, 2026 and December 31, 2025; liquidation value of $581 as of March 31, 2026 and December

31, 2025.

559

Total

convertible preferred stock

8,865

Stockholders’

deficit:

Common

stock, $0.0001 par value, 48,800,000 shares authorized as of March 31, 2026 and December 31, 2025; 22,857,534 shares issued and outstanding

as of March 31, 2026 and December 31, 2025.

Additional

paid-in capital

109

107

Accumulated

deficit

(9,575 )

(9,363 )

Accumulated

other comprehensive income

201

Total

stockholders’ deficit

(9,263 )

(9,053 )

Total

liabilities, convertible preferred stock and stockholders’ deficit

$ 4,234

$ 297

The

accompanying notes are an integral part of these condensed consolidated financial statements.

F-2

AZORA

THERAPEUTICS, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in

thousands)

Three

months ended

March 31,

2026

2025

Operating expenses:

Research

and development

$ 15

$ 234

General

and administrative

185

178

Total

operating expenses

200

412

Loss

from operations

(200 )

(412 )

Other income (expense),

net:

Change in fair value

of convertible promissory notes

(11 )

Other

income (expense), net

(1 )

Total

other income (expense), net

(12 )

Net

loss

$ (212 )

$ (385 )

Other comprehensive loss

Foreign

currency translation adjustment, net of taxes

(31 )

Total

other comprehensive loss

(31 )

Total

comprehensive loss

$ (212 )

$ (416 )

The

accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

AZORA

THERAPEUTICS, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in

thousands, except share and per share amounts)

Convertible

Preferred Stock

Additional

Accumulated

Other

Total

Series

A-1

Series

A-2

Series

A-3

Common

Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

Amount

Capital

Deficit

Income

(Loss)

Deficit

Balance at December 31, 2025

11,191,152

5,542

6,783,587

2,764

1,055,262

559

22,857,534

107

(9,363

)

201

(9,053

)

Stock-based compensation expense

Net

loss

(212

)

(212

)

Balance

at March 31, 2026

11,191,152

5,542

6,783,587

2,764

1,055,262

559

22,857,534

109

(9,575

)

201

(9,263

)

Convertible

Preferred Stock

Additional

Accumulated

Other

Total

Series

A-1

Series

A-2

Series

A-3

Common

Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

Amount

Capital

Deficit

Income

(Loss)

Deficit

Balance at December 31, 2024

11,191,152

$ 5,542

6,783,587

$ 2,764

1,055,262

$ 559

22,857,534

$ 2

$ 97

$ (8,619 )

$ 456

$ (8,064 )

Stock-based compensation expense

Foreign currency translation

adjustment

(31 )

Net

loss

(385 )

Balance

at March 31, 2025

11,191,152

$ 5,542

6,783,587

$ 2,764

1,055,262

$ 559

22,857,534

$ 2

$ 100

$ (9,004 )

$ 425

$ (8,477 )

The

accompanying notes are an integral part of these condensed consolidated financial statements.

F-4

AZORA

THERAPEUTICS, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in

thousands)

Three

months ended

March 31,

2026

2025

Cash flows from operating activities:

Net loss

$ (212 )

$ (385 )

Adjustments to reconcile

net loss to net cash used in operating activities:

Stock-based compensation

expense

Change in fair value

of convertible promissory notes

Realized and unrealized

foreign exchange gain (loss)

(29 )

Changes in operating assets

and liabilities:

Prepaid expenses and

other current assets

(3 )

Other noncurrent assets

(7 )

Accounts payable

(15 )

Deferred grant liability

(4 )

Accrued

expenses

134

133

Net

cash used in operating activities

(66 )

(247 )

Cash

flows from financing activities:

Proceeds

from issuance of convertible notes

4,000

Net

cash provided by financing activities

4,000

Effect of exchange rate

changes on cash

(5 )

Net increase (decrease)

in cash

3,934

(252 )

Cash

at beginning of period

282

675

Cash

at end of period

$ 4,216

$ 423

The

accompanying notes are an integral part of these condensed consolidated financial statements.

F-5

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nature of Business and Basis of Presentation

Azora

Therapeutics, Inc. (collectively with its wholly owned subsidiary, Azora Therapeutics Australia PTY LTD, the “Company”) was

originally incorporated on May 4, 2017 under the laws of the state of Delaware under the name Meya Pharmaceuticals, Inc. In March 2019,

Meya Pharmaceuticals, Inc. changed its name to Azora Therapeutics, Inc. The Company is a biopharmaceutical company focused on developing

aryl hydrocarbon receptor agonists to treat autoimmune diseases. The Company’s small molecule formulations are designed to rebalance

the body’s natural immune response mechanisms in order to treat serious inflammatory diseases.

Basis

of Presentation and Consolidation

The

accompanying condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in

the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

(“SEC”). The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly

owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

The

unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial

statements as of and for the year ended December 31, 2025, and, in the opinion of management, reflect all adjustments, consisting of

normal recurring adjustments, necessary for the fair presentation of the Company’s condensed consolidated balance sheet as of March 31,

2026, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026 and 2025,

condensed consolidated statements of shareholders’ deficit for the three months ended March 31, 2026 and 2025 and the condensed

consolidated statements of cash flows for the three months ended March 31, 2026 and 2025.

The

accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated

financial statements and the accompanying notes for the year ended December 31, 2025. The condensed consolidated balance sheet data as

of December 31, 2025 presented for comparative purposes was derived from the Company’s audited consolidated financial statements

but does not include all disclosures required by U.S. GAAP and Article 8 of Regulation S-X. The results for the three months ended March 31,

2026 and 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods,

or any future year or period.

The

Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December

31, 2025. Since the date of the audited consolidated financial statements for the year ended December 31, 2025, there have been no changes

to its significant accounting policies except as noted below.

Merger

and Financing

June 11, 2026, Adial Pharmaceuticals, Inc. (“Adial” or the “Acquirer”) completed the acquisition of the Company

pursuant to a merger agreement, with Azora surviving as a wholly owned subsidiary of Adial. At closing, in exchange for all shares of

capital stock of the Company, Adial issued 437,421 shares of common stock and 12,930.617 shares of Series A Non-Voting Convertible Preferred

Stock, each convertible into 1,000 shares of common stock, subject to certain conditions, including stockholder approval. The Company’s

outstanding stock options were assumed and converted into options to purchase an aggregate of 1,177,782 shares of Adial’s common

stock, also subject to stockholder approval.

F-6

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concurrently

with the Closing, Adial entered into the Purchase Agreement with certain purchasers (the “PIPE Investors”), pursuant to which

Adial agreed to issue Initial Closing Pre-Funded Warrants, Milestone Pre-Funded Warrants, and Milestone Incentive Warrants in a private

placement financing (the “PIPE Financing”). At the Initial Closing on June 12, 2026, Adial issued Initial Closing Pre-Funded

Warrants to purchase an aggregate of 9,749,345 shares of its common stock at a price of $2.7489 per Initial Closing Pre-Funded Warrant

(the “Purchase Price”), for gross proceeds of approximately $26.8 million. The PIPE Investors may also participate in a future

Milestone Closing, pursuant to which Adial may issue Milestone Pre-Funded Warrants to purchase up to an aggregate of 9,749,345 shares

of its common stock and Milestone Incentive Warrants to purchase up to an aggregate of 9,749,345 shares of its common stock upon the

occurrence of specified milestone events, resulting in aggregate additional proceeds to Adial of up to approximately $26.8 million.

Each

Pre-Funded Warrant has an exercise price of $0.001 per share, does not expire until exercised in full, and is exercisable upon receipt

of stockholder approval, subject to certain beneficial ownership limitations. The Milestone Incentive Warrants have an exercise price

equal to the Purchase Price, expire five years from issuance, and are subject to substantially similar stockholder approval and beneficial

ownership provisions.

connection with the Merger, Adial also facilitated the extinguishment of $5.5 million of Azora convertible promissory notes through exchange

agreements, whereby noteholders received pre-funded warrants to purchase 2,031,603 shares of common stock and may participate in future

milestone financings on similar terms as PIPE Investors. The former noteholders are also entitled to participate in Milestone Closings

to purchase Milestone Pre-Funded Warrants and Milestone Incentive Warrants to purchase up to an aggregate of 2,031,603 shares of Adial

common stock, each on substantially the same terms as the PIPE Investors.

Liquidity

and Going Concern

The

Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date the condensed consolidated financial statements are available to

be issued.

date, the Company has funded its operations primarily with proceeds from the issuance and sale of convertible preferred stock and convertible

promissory notes and the receipt of grant funding. As of March 31, 2026, the Company has raised an aggregate of $13.4 million in net

proceeds through the sale of convertible preferred stock and convertible promissory notes and the receipt of grant funding. The Company

has incurred annual net operating losses in every year since inception, including net losses of $0.2 million and $0.4 million for the

three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had cash of $4.2 million and an accumulated

deficit of $9.6 million. The Company expects its operating losses to continue into the foreseeable future as it continues to pursue its

research and development efforts.

The

Company’s ability to continue as a going concern is dependent upon the ability to raise additional debt or equity capital. There

can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to the Company. These factors raise

substantial doubt about the Company’s ability to continue as a going concern. Based upon the Company’s current plans, management

believes there currently is insufficient financial resources to fund the Company’s operations for at least twelve months from the

date these condensed consolidated financial statements are available to be issued. As such, there is substantial doubt about the Company’s

ability to continue as a going concern. To address the Company’s capital needs, the Company will continue to actively pursue additional

equity or debt financing. Adequate financing opportunities might not be available to the Company, when and if needed, on acceptable terms

or at all. If the Company is unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances,

the Company’s operating results and prospects will be adversely affected. The accompanying condensed consolidated financial statements

have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary

course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification

of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

F-7

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Fair

Value of Financial Instruments

ASC

Topic 820, Fair Value Measurement (“ASC 820”) identifies fair value as the price that would be received to sell an

asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly

transaction between market participants on the measurement date. In determining fair value, the use of various valuation approaches,

including market, income, and cost approaches, is permitted.

fair value hierarchy has been established based on whether the inputs to valuation techniques are observable or unobservable. Observable

inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s

own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques

used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes

a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that

may be used to measure fair value.

a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy

that distinguishes among the following:

● Level

1 – Quoted market prices in active markets;

● Level

2 – Inputs, other than the quoted prices in active markets, that are observable either

directly or indirectly; and

● Level

3 – Unobservable inputs in which there is little or no market data.

the extent that the valuation is based on inputs that are less observable or unobservable in the market, the determination of fair value

requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments

categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input

that is significant to the fair value measurement.

During

the three months ended March 31, 2026, the Company issued convertible promissory notes, which are measured at fair value on the issuance

date, with changes in fair value recognized in other income (expense), net on the condensed consolidated statements of operations and

comprehensive loss. The carrying amounts of the Company’s cash, prepaid expenses and other current assets, other non-current assets,

accounts payable, and accrued expenses approximate their fair values due to their short-term nature.

Change

in Fair Value of Convertible Notes

Beginning

in March 2026, the Company began issuing convertible promissory notes to investors. The Company has elected to apply the fair value measurement

option and recognized the convertible promissory notes at fair value with changes in fair value recognized on the condensed consolidated

statements of operations and comprehensive loss. The fair value option may be applied instrument by instrument, but it is irrevocable.

As a result of applying the fair value option, costs incurred upon issuance of the convertible promissory notes were recorded as an expense

on the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026. Accrued interest

related to the convertible promissory notes has been included within the change in fair value of convertible notes line within other

income (expense), net on the condensed consolidated statements of operations and comprehensive loss.

F-8

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

Recently

Issued

November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic

220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires entities to disclose additional information

about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after

March 15, 2026 and for interim periods within fiscal years beginning after March 15, 2027. Early adoption is permitted. ASU 2024-03 may

be applied retrospectively or prospectively. The Company is currently evaluating the effect of this update on its financial statements

and related disclosures.

Fair Value Measurements

The

following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis at March

31, 2026 (in thousands):

Fair

value measurements

Level

Total

Financial

liabilities:

Convertible

promissory notes

$ -

$ 4,011

Total financial liabilities

$ -

$ 4,011

of December 31, 2025, there were no financial assets and liabilities measured at fair value. During the three months ended March 31,

2026 and 2025, there were no transfers between levels.

2026

Notes

Beginning

in March 2026, the Company issued convertible promissory notes (the “2026 Notes”) to various investors for a total principal

amount of $4.0 million with a stated interest rate of 8.0% per annum and a maturity date of March 16, 2028. In May 2026, the Company

completed the final closing of the 2026 Notes on the same terms as the initial issuances of the 2026 Notes for an aggregate principal

amount of $1.5 million.

Upon

a qualified financing, which is an event in which the Company issues and sells its convertible preferred stock to investors with total

gross proceeds equal to at least $50.0 million, the outstanding principal and accrued interest of the 2026 Notes will automatically convert

into the equity securities sold in such a financing at the conversion price then in effect. The 2026 Notes were subsequently extinguished

as a part of the PIPE Financing discussed in Note 1.

The

2026 Notes are classified as a liability on the Company’s condensed consolidated balance sheets and the Company elected to record

the 2026 Notes at fair value upon issuance and to subsequently remeasure the fair value at every reporting date. The fair value of the

2026 Notes is an estimate based on significant inputs not observable in the market, representing a Level 3 measurement within the

fair value hierarchy. The Company records any change in fair value to the 2026 Notes within the change in fair value of convertible notes

line in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss.

The

Company recorded accrued interest of $11 thousand as a change in fair value of the 2026 Notes for the three months ended March 31, 2026.

Since the 2026 Notes were issued shortly prior to March 31, 2026 and there were no inflection points for the Company or other significant

economic fluctuations, the Company has determined that the only change in fair value during the period is attributable to the accrual

of contractual interest.

F-9

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The

table below presents changes in the 2026 Notes liability during the three months ended March 31, 2026:

Convertible

Promissory

Notes

Balance as of December

31, 2025

$ -

Issuance of

convertible promissory notes

4,000

Change in fair value of

convertible promissory notes

Balance as of March 31,

2026

$ 4,011

Prepaid Expenses and Other Current Assets

of March 31, 2026 and December 31, 2025, prepaid expenses and other current assets consisted of the following (in thousands):

March

31,

December

31,

2026

2025

Prepaid research

and development expenses

$ 2

Prepaid employee benefits

Prepaid insurance

Other prepaid expenses

Total

$ 11

$ 8

Accrued Expenses and Other Current Liabilities

of March 31, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following (in thousands):

March

31,

December

31,

2026

2025

Accrued research

and development expenses

$ 2

$ 11

Accrued professional expenses

Accrued personnel expenses

558

445

Accrued other expenses

Other current liabilities

Total

$ 594

$ 459

Grant Income

October 2024, the Company entered into a grant agreement with the Kenneth Rainin Foundation under which the Company was awarded $0.3

million to reimburse specific research and development expenses incurred in support of a novel oral small-molecule program for ulcerative

colitis. The grant funds were required to be distributed or committed within 12 months of the grant date, and the Company received the

full $0.3 million in grant funds in October 2024. During the three months ended March 31, 2025, the Company incurred reimbursable research

and development expenses of $4 thousand. As of March 31, 2025, the full amount of the second grant had been utilized, and no deferred

grant liability remained.

Reimbursements

under the grant agreement are recorded as reductions of the related research and development expenses in the Company’s condensed

consolidated statements of operations and comprehensive loss. Any grant proceeds received in advance of eligible expenditures are recorded

as a deferred grant liability in the condensed consolidated balance sheets.

F-10

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Convertible Preferred Stock

of March 31, 2026 and December 31, 2025, the Company’s certificate of incorporation, as amended and restated (the “Amended

and Restated Certificate of Incorporation”) authorized the Company to issue 19,057,182 shares of preferred stock, at $0.0001 par

value per share.

Series

A-1

On June

1, 2021, the Company entered into the Series A preferred stock purchase agreement (the “Series A Purchase Agreement”)

with several investors in which the Company issued and sold 9,941,152 shares of Series A-1 convertible preferred stock (“Series

A-1”, the “Series A Initial Issuance”), with a par value of $0.0001, at a purchase price of $0.50 per share for

total proceeds of $4.9 million, net of issuance costs of $0.1 million. The Series A Purchase Agreement allows for one additional sale

of up to 11,191,152 shares of Series A-1 (“Series A-1 Additional Issuance”) to one or more purchasers within 90 days of

the Series A Initial Issuance. An additional 1,250,000 shares of Series A-1 were issued at $0.50 per share on August 30,

2021, as part of the Series A-1 Additional Issuance, for total proceeds of $0.6 million.

Series

A-2

From

March through June 2021, the Company issued convertible promissory notes (the “2021 Notes”) in the principal amount of $2.7

million. In June 2021, concurrently with the Series A Purchase Agreement, all of the outstanding principal plus $0.1 million of accrued

interest relating to the 2021 Notes was automatically converted into 6,783,587 shares of Series A-2 convertible preferred stock (“Series

A-2”), with a par value of $0.0001, at a purchase price of $0.40750 per share.

Series

A-3

On August

2, 2023, the Company entered into the Series A-3 preferred stock purchase agreement (the “Series A-3 Purchase Agreement”)

with several investors in which the Company issued and sold 1,055,262 shares of Series A-3 convertible preferred stock (“Series

A-3”), with a par value of $0.0001, at a purchase price of $0.5510 per share for total proceeds of $0.6 million, net of issuance

costs of $22 thousand.

The

following table presents information about the Series A-1, Series A-2, and Series A-3 (collectively the “Convertible Preferred

Stock”) as of March 31, 2026 and December 31, 2025 (in thousands except share and per share amounts):

Preferred

Stock

Authorized

Preferred

Stock

Issued and

Outstanding

Carrying

Value

Liquidation

Value

Common

Stock

Issuable Upon

Conversion

Series A-1

Convertible Preferred Stock

11,191,152

$ 5,542

$ 5,596

11,191,152

Series A-2 Convertible

Preferred Stock

6,783,587

2,764

6,783,587

Series A-3 Convertible

Preferred Stock

1,082,443

1,055,262

559

581

1,055,262

Total

19,057,182

19,030,001

$ 8,865

$ 8,941

19,030,001

The

following is a description of the rights of the holders of the Convertible Preferred Stock as of March 31, 2026:

Liquidation

Rights

the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the affairs of the Company, including a deemed liquidation

event, each holder of a share of the Convertible Preferred Stock shall be entitled to receive, prior and in preference to any distribution

of any of the assets or surplus funds of the Company to the holders of common stock, an amount equal to the greater of the original issuance

price plus any declared but unpaid dividends or the amount that would be payable if all classes of stock had converted to common.

F-11

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the event of a deemed liquidation event, if the assets of the Company available for distribution are insufficient to pay the holders

of Convertible Preferred Stock in the full amount they are entitled, the holders of Convertible Preferred Stock shall share ratably in

any distribution of the assets available for distribution in proportion to the number of preferred shares that they hold.

Each

of the following events shall be considered a Deemed Liquidation Event (“Deemed Liquidation Event”); a merger, consolidation,

the sale, lease, transfer, exclusive license or other disposition of all or substantially all of this Company’s assets/intellectual

property or the sale or transfer of stock representing a more than 50% of the voting power of the voting securities of the Company.

Redemption

The

Convertible Preferred Stock do not contain any mandatory redemption features, except for the contingent redemption upon the occurrence

of a Deemed Liquidation Event.

Conversion

Each

share of Convertible Preferred Stock is convertible at the option of the holder, at any time after the date of issuance and without the

payment of any additional consideration, into that number of shares of common stock as is determined by dividing the original issuance

price of $0.50 per share for Series A-1, $0.4075 per share for Series A-2, and $0.5510 per share for Series A-3 by the conversion price

in effect at the time of conversion. As of March 31, 2026 and December 31, 2025, the conversion prices were equal to the original issuance

prices.

All

outstanding shares of Convertible Preferred Stock are automatically convertible based upon either: (i) the written consent of holders

of a majority of all outstanding preferred stock , voting as a single class and on an as converted basis, (ii) the closing of a sale

of shares of common stock to the public in a firm commitment underwritten public offering resulting in at least $25.0 million of gross

proceeds or market capitalization of the Company of at least $150.0 million, or (iii) the effectiveness of a registration statement in

connection with a listing on a national securities exchange, provided that within 30 days the Company obtains an independent third party

valuation demonstrating market capitalization of the Company of at least $150.0 million.

Voting

Rights

The

holders of Convertible Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which each

share of preferred stock is convertible at the time of such vote. The holders of Convertible Preferred Stock vote together with the common

stockholders as a single class.

Protective

Rights

Holders

of Convertible Preferred Stock are entitled to protective rights, which require the affirmative vote of a majority of the Convertible

Preferred Stock stockholders for certain corporate actions, which include, but are not limited to the sale of the Company, its liquidation,

the acquisition of assets or a business, and the authorization of additional shares of the Company’s capital.

Dividend

Rights

The

holders of Convertible Preferred Stock are entitled to receive, when and if declared by the board of directors, noncumulative dividends

at the annual rate of 6% of the original issuance price per share of the Convertible Preferred Stock, subject to certain adjustments.

No dividends have been declared through March 31, 2026.

F-12

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Common Stock

of March 31, 2026 and December 31, 2025, the Company is authorized to issue up to 48,800,000 shares of common stock, with a $0.0001 par

value per share.

The

holders of common stock are entitled to one vote per share of common stock owned and are entitled to dividends, when and if declared

by the Company’s board of directors. The voting, dividend, and liquidation rights of the holders of common stock are subject to

and qualified by the rights of the Convertible Preferred Stock stockholders.

The

Company has reserved shares of common stock for the conversion or exercise of the following securities:

March 31,

December 31,

2026

2025

Redeemable convertible preferred

stock

19,030,001

Options to purchase common stock

1,224,772

Common stock reserved

for future issuance under the 2017 Plan

3,312,147

Total

23,566,920

10.

Stock-based Compensation

2017

Equity Incentive Plan

The

Company authorized the 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which permits the grant of stock options

and restricted common stock to its employees for up to 4,869,453 shares of common stock. All option awards are granted with an exercise

price equal to or greater than the market price of the Company’s common stock at the date of grant. Option awards generally vest

over four years, and the vested options are exercisable over a period no longer than 10 years after the grant date. Certain option and

restricted common stock awards provide for accelerated vesting if there is a change in control as defined in the 2017 Plan. As of March

31, 2026, there were 3,312,147 options available for future grant under the 2017 Plan.

Stock

Options

The

fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. There were no options

granted during either of the three months ended March 31, 2026 or 2025.

summary of option activity under the 2017 Plan for the three months ended March 31, 2026 is presented below:

Number

of Shares

Weighted-Average

Exercise Price

Weighted-Average

Remaining

Contractual Term

(in years)

Aggregate

Intrinsic Value

(in thousands)

Outstanding at December 31, 2025

1,224,772

$ 0.23

6.12

$ 86

Granted

$ -

Exercised

$ -

Cancelled or forfeited

$ -

Outstanding at March 31, 2026

1,224,772

$ 0.23

5.94

$ 9

Vested and expected to vest as of March 31, 2026

1,224,772

$ 0.23

5.94

$ 9

Vested and exercisable as of March 31, 2026

1,142,531

$ 0.22

5.81

$ 9

Stock-Based

Compensation Expense

Stock-based

compensation expense was immaterial for the three months ended March 31, 2026 and 2025. Unrecognized stock-based compensation expense

as of March 31, 2026 was immaterial.

F-13

AZORA

THERAPEUTICS, INC.

NOTES

TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11.

Commitments and Contingencies

Legal

Proceedings

The

Company is not currently a party to and is not aware of any legal proceedings.

Other

Contracts

The

Company is party to various contracts with contract research organizations and contract manufacturers that generally provide for termination

on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

There

are no contractual obligations arising from these arrangements as of March 31, 2026 and December 31, 2025.

Indemnification

Agreements

permitted under Delaware law, the Company indemnifies its officers, directors, and employees for certain events or occurrences while

the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification is for the

officer’s or director’s lifetime. Further, in the ordinary course of business the Company may provide indemnification of

varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited

to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. The maximum

potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

To date however, the Company has not incurred any material costs as a result of such indemnifications nor experienced any losses related

to them. As of March 31, 2026 and December 31, 2025, the Company was not aware of any claims under indemnification arrangements and does

not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these

obligations is negligible; therefore, no related reserves were established.

12.

Related Parties

The

Company’s Chief Executive Officer and Chief Operating Officer are members of the Company’s board of directors and together

with their immediate families, hold approximately 36% and 25%, respectively, of the Company’s outstanding equity at both March

31, 2026 and December 31, 2025. As a result of their ownership interests and management roles, the Chief Executive Officer and Chief

Operating Officer have significant influence over the Company’s management, operations, and strategic direction, including matters

subject to board of director approval.

addition, in March 2026, the Company issued 2026 Notes to the Company’s former Chief Financial Officer and to a family member of

the Company’s Chief Executive Officer in an aggregate principal amount of $0.1 million. The 2026 Notes issued to related parties

were issued on the same terms as those offered to unaffiliated investors.

13.

Subsequent Events

The Company evaluated subsequent events through August 10, 2026, the date these financial statements were issued, for events requiring

recording or disclosure in the financial statements for the three months ended March 31, 2026. Except as noted below and in Note 1, the

Company concluded that no subsequent events have occurred that require disclosure.

Stock

Option Grants

In April 2026, the Company issued

options to purchase 2,465,610 shares of common stock with an exercise price of $0.20 per share. 523,595 of the options issued vest fully

upon the occurrence of merger or similar transaction and the remaining options issued vest over a four-year term. The aggregate grant

date fair value of the options issued in April 2026 was $0.4 million.

F-14

EX-99.5

Filename: ea029980001ex99-5.htm · Sequence: 5

Exhibit 99.5

UNAUDITED

PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

June 11, 2026, Adial Pharmaceuticals, Inc. (“Adial” or the “Company”) acquired Azora Therapeutics, Inc. (“Azora”),

a Delaware corporation and biopharmaceutical company developing treatments for serious inflammatory diseases (the “Acquisition”),

in accordance with the terms of an Agreement and Plan of Merger, dated June 11, 2026 (the “Merger Agreement”), by and among

Adial, Adial Merger Sub, Inc. (“First Merger Sub”), Adial Second Merger Sub, LLC (“Second Merger Sub”) and Azora.

Pursuant to the merger agreement, First Merger Sub merged with and into Azora, with Azora surviving as a wholly owned subsidiary of Adial

(the “First Merger”).

Immediately

following the First Merger, Azora merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly owned subsidiary

of Adial and the Second Merger Sub changing its name to “Azora Therapeutics, LLC” (the “Second Merger” and, together

with the First Merger, the “Merger”). At closing of the Merger, Adial issued to former Azora stockholders 437,421 shares

of Adial common stock and 12,930.617 shares of Series A Non-Voting Convertible Preferred Stock. Each share of Series A Non-Voting Convertible

Preferred Stock is convertible into 1,000 shares of Adial common stock, subject to the terms and limitations set forth in the applicable

certificate of designation and related transaction documents. Azora outstanding options to purchase Azora common stock were converted

into options to purchase 1,177,782 shares of Adial Common Stock. The Acquisition was completed on June 11, 2026 (the “Closing”).

June 11, 2026, in connection with and as a condition to closing of the Merger, Adial entered into a Securities Purchase Agreement (the

“Purchase Agreement”) with the purchasers named therein (the “PIPE Investors”), pursuant to which Adial issued

and sold to the PIPE Investors, in a private placement transaction, at the initial closing on June 12, 2026 (the “Initial PIPE

Closing”) pre-funded warrants (the “Initial Closing Pre-Funded Warrants”) to purchase up to an aggregate of 9,749,345

shares of Adial common stock, at a price of $2.7489 per Initial Closing Pre-Funded Warrant, for an aggregate purchase price of $26.8

million. In addition, Adial agreed to issue and sell to the PIPE Investors at one or more subsequent closings (each, a “Milestone

Closing”), pre-funded warrants (“Milestone Pre-Funded Warrants”) to purchase up to an aggregate of 9,749,345 shares

of Adial common stock and incentive warrants (“Milestone Incentive Warrants” and together with the Milestone Pre-Funded Warrants,

the “Milestone Warrants”) to purchase up to an aggregate of 9,749,345 shares of Adial common stock, at a combined purchase

price equal to $2.7489 per Milestone Warrants, for an aggregate purchase price of up to $26.8 million. The issuance and sale of Initial

Closing Pre-Funded Warrants and Milestone Warrants pursuant to the Purchase Agreement are collectively referred to as the “Financing.”

Pursuant

to the terms of the Merger Agreement, upon the closing of the Merger, Adial agreed to guarantee the payment of $5.5 million in principal

amount of certain amended and restated convertible promissory notes issued by Azora (the “Azora Notes”) to certain individuals

(collectively, the “Former Azora Noteholders”). On June 11, 2026, Adial entered into exchange agreements (the “Exchange

Agreements”) with the Former Azora Noteholders to extinguish the payment guaranty and retire the Azora Notes in exchange for the

issuance to the Former Azora Noteholders of Initial Closing Pre-Funded Warrants to purchase an aggregate of 2,031,603 shares of Adial

common stock (the “Azora Note Exchange”). As a result of the Azora Note Exchange, all such Azora Notes have been deemed to

be repaid in full and all outstanding obligations thereunder have been extinguished. Pursuant to the Exchange Agreements, the Former

Azora Noteholders are entitled to participate in Milestone Closings to purchase Milestone Pre-Funded Warrants to purchase up to an aggregate

of 2,031,603 shares of Adial common stock and Milestone Incentive Warrants to purchase up to an aggregate of 2,031,603 shares of Adial

common stock, at a combined price of $2.7489, on substantially the same terms as the PIPE Investors under the Purchase Agreement, for

an aggregate purchase price of up to $5.6 million.

The

Azora Note Exchange, together with the Merger and the Financing, are referred to as the “Transactions.”

On June 11, 2026, Adial publicly announced the

Transactions and filed a Current Report on Form 8-K attaching the Merger Agreement, the Purchase Agreement, the Exchange Agreement and

related transaction documents. In that announcement, the Company stated that, following the Merger, the combined company would advance

Azora’s colon-targeted AhR program through key clinical milestones in ulcerative colitis, including the opening of an IND, a Phase

1a SAD/MAD study and Phase 1b proof-of-concept studies in ulcerative colitis patients. The Company expects to file an IND in the first

half of 2027, followed by a Phase 1a initiation and a proof-of-concept readout in ulcerative colitis in the first half of 2028.

Unaudited

Pro Forma Condensed Combined Financial Information

The

unaudited pro forma condensed combined financial information has been prepared by Adial in accordance with Regulation S-X Article 11,

Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Business,

as adopted by the SEC on May 20, 2020 (“Article 11”). The following unaudited pro forma condensed combined financial

information gives effect to the Acquisition of Azora and the other related Transactions.

The

unaudited pro forma condensed combined balance sheet as of March 31, 2026 combines the historical balance sheet of Adial as of March

31, 2026 and the historical balance sheet of Azora as of March 31, 2026 and depicts the accounting for the Acquisition, the concurrent

Financing, and Transactions (“pro forma balance sheet transaction accounting adjustments”). The unaudited pro forma condensed

combined statements of operations for the three months ended March 31, 2026 and for the year ended December 31, 2025 combine the

historical results of Adial and Azora and depict the pro forma balance sheet transaction accounting adjustments for the Acquisition and

Transactions assuming that those adjustments were made as of January 1, 2025 (“pro forma statements of operations transaction accounting

adjustments”). Collectively, pro forma balance sheet transaction accounting adjustments and pro forma statements of operations

transaction accounting adjustments are referred to as “transaction accounting adjustments.” These unaudited pro forma condensed

combined financial information for the three months ended March 31, 2026 and year ended December 31, 2025 and related notes have been

derived from and should be read in conjunction with:

● the

historical audited consolidated financial statements of Adial and the related notes, and Management’s Discussion and Analysis of

Financial Condition and Results of Operations included in Adial’s annual report on Form 10-K for the fiscal year ended December

31, 2025, as filed with the SEC on March 5, 2026 and incorporated herein by reference;

● the

historical unaudited interim financial statements of Adial and the related notes, and Management’s Discussion and Analysis of Financial

Condition and Results of Operations included in Adial’s quarterly report in Form 10-Q for the three months ended and as of March

31, 2026, as filed with the SEC on May 8, 2026 and incorporated by herein reference;

● the

historical audited financial statements of Azora as of and for the year ended December 31, 2025, as filed with the SEC as Exhibit 99.3

to Adial’s Form 8-K/A filed on August 10, 2026 and incorporated herein by reference; and

● the

historical unaudited interim financial statements of Azora and the related notes as of and for the quarter ended March 31, 2026, as filed

with the SEC as Exhibit 99.4 to Adial’s Form 8-K/A filed on August 10, 2026 and incorporated herein by reference.

Azora’s

historical financial information has been incorporated by reference for purposes of preparing the unaudited pro forma condensed combined

financial information. The unaudited pro forma condensed combined financial information is provided for illustrative purposes only,

does not necessarily reflect what the actual consolidated results of operations and financial position would have been had the Acquisition

occurred on the dates assumed and may not be useful in predicting the future consolidated results of operations or financial position.

The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial

conditions, regulatory matters, operating efficiencies or other savings or expenses that may result from the Acquisition.

The

transaction accounting adjustments to the unaudited pro forma condensed combined financial information are based on the assumptions described

in the accompanying notes. The unaudited pro forma condensed combined financial information is not necessarily indicative of the financial

position or results of operations in future periods or the results that actually would have been realized had Adial and Azora been a

combined organization during the specified periods.

UNAUDITED

PRO FORMA CONDENSED COMBINED BALANCE SHEET

OF MARCH 31, 2026

(in

thousands of dollars)

Historical

PIPE

Transaction Accounting

Pro Forma

Adial

Azora

Financing

Adjustments

Combined

Assets

Current assets:

Cash and cash equivalents

$ 4,584

$ 4,216

$ 24,325

3(a)

$ 1,500

6(a)

$ 32,499

(2,134 )

6(b)

885

6(c)

(877 )

6(d)

Prepaid expenses and other current assets

219

230

Total current assets

4,803

4,227

24,325

(626 )

32,729

Equity method investments

422

Intangible assets

44,107

6(e)

(44,107 )

6(f)

Other assets

Total assets

$ 5,228

$ 4,234

$ 24,325

$ (626 )

$ 33,161

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

574

$ 27

$ -

$ 601

Accrued expenses and other current liabilities

936

594

1,530

Total current liabilities

1,510

621

2,131

PIPE warrant liability

32,092

3(a)

32,092

Convertible promissory notes

4,011

(5,585 )

3(a)

1,574

6(a)

Total liabilities

1,510

4,632

26,507

1,574

34,223

Adial Preferred Stock

38,533

6(e)

38,533

Stockholders’ equity:

Adial common stock

6(c)

Azora common and preferred stock

8,867

(8,867 )

6(e)

Additional paid-in capital

95,711

109

5,939

3(a)

884

6(c)

105,633

(109 )

6(e)

1,664

6(e)

1,304

6(e)

131

6(d)

Accumulated other comprehensive income

201

(201 )

6(e)

Accumulated deficit

(91,995 )

(9,575 )

(8,121 )

3(a)

(74 )

6(a)

(145,231 )

(2,134 )

6(b)

(1,008 )

6(d)

11,783

6(e)

(44,107 )

6(f)

Total stockholders’ equity

3,718

(398 )

(2,182 )

(40,733 )

(39,595 )

Total liabilities, convertible preferred stock and stockholders' equity

$ 5,228

$ 4,234

$ 24,325

$ (626 )

$ 33,161

See

accompanying notes to the unaudited pro forma condensed combined financial information.

UNAUDITED

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR

THE THREE MONTHS ENDED MARCH 31, 2026

(in

thousands of dollars, except shares and per share amounts)

Historical

Transaction Accounting

Pro Forma

Adial

Azora

Adjustments

Combined

Operating expenses:

Research and development

$ 433

$ 15

$ -

$ 448

General and administrative

1,569

185

1,754

Total operating expenses

2,002

200

2,202

Loss from operations

(2,002 )

(200 )

(2,202 )

Other income (expense), net:

Interest income

Change in fair value of convertible promissory notes

(11 )

7(c)

Other expense, net

(1 )

Net income (loss) before income taxes

(1,955 )

(212 )

(2,156 )

Losses from investments in equity method investees, net of tax

(68 )

Net loss

(2,023 )

(212 )

(2,224 )

Net loss attributable to common stockholders

$ (2,023 )

$ (212 )

$ 11

$ (2,224 )

Net loss per share attributable to common stockholders — basic and diluted

$ (1.48 )

$ (0.15 )

7(f)

Weighted average common shares outstanding — basic and diluted

1,370,109

14,738,147

7(f)

See

accompanying notes to the unaudited pro forma condensed combined financial information.

UNAUDITED

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR

THE YEAR ENDED DECEMBER 31, 2025

(in

thousands of dollars, except shares and per share amounts)

Historical

PIPE

Transaction

Accounting

Pro Forma

Adial

Azora

Financing

Adjustments

Combined

Operating expenses:

Research and development

$ 2,620

$ 340

$ -

$ 2,960

General and administrative

5,180

660

4,609

7(a)

11,457

1,008

7(d)

Total operating expenses

7,800

1,000

5,617

14,417

Loss from operations

(7,800 )

(1,000 )

(5,617 )

(14,417 )

Other income (expense), net:

Interest income

150

151

Acquired in-process research and development

(44,107 )

7(b)

(44,107 )

Loss on settlement of convertible notes

(6,054 )

7(e)

(6,054 )

Other expense, net

165

255

420

Net income (loss) before income taxes

(7,485 )

(744 )

(6,054 )

(49,724 )

(64,007 )

Losses from investments in equity method investees, net of tax

(492 )

Net loss

(7,977 )

(744 )

(6,054 )

(49,724 )

(64,499 )

Foreign currency translation adjustment, net of taxes

(255 )

Total other comprehensive income (loss)

(255 )

Total comprehensive loss

$ (7,977 )

$ (999 )

$ (6,054 )

$ (49,724 )

$ (64,754 )

Net loss attributable to common stockholders

$ (7,977 )

$ (744 )

$ (6,054 )

$ (49,724 )

$ (64,499 )

Net loss per share attributable to common stockholders — basic and diluted

$ (11.93 )

$ (4.60 )

7(f)

Weighted average common shares outstanding — basic and diluted

668,630

14,036,668

7(f)

See

accompanying notes to the unaudited pro forma condensed combined financial information.

NOTES

TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Description of the Acquisition

June 11, 2026, Adial, First Merger Sub, Second Merger Sub and Azora entered into the merger agreement, pursuant to which Adial acquired

Azora. Pursuant to the merger agreement, First Merger Sub merged with and into Azora, with Azora surviving as a wholly owned subsidiary

of Adial. Immediately following the First Merger, Azora merged with and into Second Merger Sub, with Second Merger Sub surviving as a

wholly owned subsidiary of Adial and the Second Merger Sub changing its name to “Azora Therapeutics, LLC”. The transaction

was structured as a merger intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

Upon

Closing on June 11, 2026, the following was effected:

● Adial

acquired all outstanding equity interests of Azora pursuant to the merger agreement, and Azora became a wholly owned subsidiary of Adial.

● Outstanding

Azora equity awards were assumed by Adial and converted into Adial equity awards treated in accordance with the merger agreement and

related transaction documents, including any applicable cancellation, conversion, replacement, or settlement provisions.

Historical Azora

Closing, the merger consideration issued to former Azora stockholders consisted of shares 437,421 of Adial common stock and 12,930.617

shares of Series A Non-Voting Convertible Preferred Stock. Each share of Series A Non-Voting Convertible Preferred Stock is convertible

into 1,000 shares of Adial common stock, subject to the terms and limitations set forth in the applicable certificate of designation

and related transaction documents. Adial also assumed Azora options to purchase 1,177,782 shares of Adial common stock. The issuance

of Adial securities in connection with the merger is reflected in the unaudited pro forma condensed combined financial information based

on preliminary estimates and the terms of the merger agreement.

Concurrent Private Placement

connection with and as a condition to closing of the Merger, Adial entered into a securities purchase agreement and related registration

rights arrangement with the purchasers in the private placement. At the initial PIPE closing on June 12, 2026, pre-funded warrants Initial

Closing Pre-Funded Warrants to purchase up to an aggregate of 9,749,345 shares of Adial common stock were issued to the PIPE Investors,

for gross cash proceeds of approximately $26.8 million.

Pursuant

to the terms of the Merger Agreement, upon the closing of the Merger, Adial agreed to guaranty the payment of $5.5 million in principal

amount to the Former Azora Noteholders. On June 11, 2026, Adial entered into exchange agreements with the Former Azora Noteholders to

extinguish the payment guarantee and retire the Azora Notes in exchange for the issuance to the Former Azora Noteholders of Initial Closing

Pre-Funded Warrants to purchase an aggregate of 2,031,603 shares of Adial common stock. As a result of the Azora Note Exchange, all the

Azora Notes have been deemed to be repaid in full and all outstanding obligations thereunder have been extinguished.

The

pro forma financial information reflects the effects of the initial financing and related transaction accounting adjustments based on

the terms available as of the Initial PIPE Closing.

The

private placement and Exchange Agreement also provides for up to approximately $32.0 million in additional gross proceeds upon Phase

1 clinical study initiation, for the potential issuance to the PIPE Investors and Former Azora Noteholders of additional pre-funded

warrants to purchase up to 11,780,948 shares of Adial common stock and 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 accompanying common warrant sold at milestone

closings. The additional warrants to be issued in such milestone closings are classified as a liability because the number of warrants ultimately

issuable is not fixed, it depends on the extent to which each holder has exercised its Initial Closing Pre-Funded Warrants prior to the

related milestone closing, causing the instrument to fail the fixed-for-fixed criterion under Accounting Standards Codification Topic

815-40, and precluding equity classification. Accordingly, the additional warrant rights are recorded as a liability at fair value upon issuance,

with subsequent changes in fair value recognized in earnings each reporting period.

a) To reflect the initial closing of the concurrent private placement entered into in connection with

the Merger, including approximately $26.8 million in upfront gross proceeds from the issuance of pre-funded warrants to purchase

9,749,345 shares of Adial common stock at a purchase price of $2.7489 per pre-funded warrant, less issuance costs of approximately

$2.5 million, and the exchange of the total outstanding principal and accrued interest of approximately $5.6 million of Azora notes

assumed in the Acquisition for the issuance of pre-funded warrants to purchase 2,031,603 shares of Adial common stock. The

adjustment records the loss of $6.1 million associated with the extinguishment of the Azora notes and the recognition of equity

classified pre-funded warrants of $6.1 million and liability classified rights issued in exchange for the notes extinguishment. The adjustment records the proceeds from the initial

PIPE Closing, net of placement agent fees and other offering expenses, and reflects the classification of the pre-funded warrants of

$0.3 million as additional paid-in capital equity and related financing instruments as derivative liabilities of $32.1 million with

allocated transaction costs of approximately $2.5 million included in accumulated deficit in accordance with applicable accounting

guidance. The potential additional $32.0 million milestone tranche, including additional pre-funded warrants and common warrants

issuable upon Phase 1 clinical study initiation, is not reflected in the unaudited pro forma condensed combined financial

information because the milestone condition had not been satisfied as of the Closing.

(in

thousands)

Gross proceeds from financing

$ 26,800

Payment of cash transaction costs

(2,475 )

Pro forma adjustment, net cash

$ 24,325

Basis of Pro Forma Presentation

The

unaudited pro forma condensed combined financial information has been prepared by management in accordance with Article 11, of Regulation

S-X and is presented in USD. The adjustments presented in the unaudited pro forma condensed combined financial information have been

identified and presented to provide relevant information necessary for an understanding of the combined company after the consummation

of the Acquisition, the concurrent private placement, and other related Transactions.

In accordance with Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), upon initially consolidating a variable interest

entity ("VIE") that does not meet the definition of a business, the assets acquired and liabilities assumed are recognized and measured

on a basis consistent with the acquisition method of accounting for asset acquisitions. Under this guidance, the assets and liabilities

are recognized and measured based on their fair values, and no goodwill is recorded or recognized. Acquired IPR&D that has no future alternative use is expensed at the time of acquisition.

The

unaudited pro forma condensed combined financial information reflects certain adjustments to align Azora’s historical financial

information with Adial’s presentation and accounting policies, as applicable. These adjustments reflect Adial’s best estimates

based on the information currently available.

The

unaudited pro forma condensed combined balance sheet reflects adjustments that depict the accounting for the Acquisition, the Financing,

and the Transactions. The unaudited pro forma condensed combined statements of operations reflect adjustments that give effect to Adial’s

results of operations as if those adjustments for the Acquisition, the Financing and the Transactions were made as of the beginning of

January 1, 2025. The unaudited pro forma condensed combined financial statements have been prepared based on the Company’s and

Azora’s historical financial information, giving effect to the Acquisition and related adjustments described in these notes to

show how the Acquisition might have affected the historical financial statements if it had been completed on January 1, 2025 for

the purposes of the unaudited pro forma condensed combined statements of operations, and as of December 31, 2025, for purposes of

the unaudited pro forma condensed combined balance sheet.

The

unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies,

tax savings, or cost savings that may be associated with the Acquisition and the Transactions. In addition, the income tax effects of

the transaction accounting adjustments are not expected to be meaningful given the combined entity incurred significant losses during

the historical periods presented, and therefore, no income tax adjustments are included in the unaudited pro forma condensed combined

financial information. The unaudited pro forma condensed combined financial information constitutes forward-looking information, is subject

to certain risks and uncertainties that could cause actual results to differ materially from those anticipated and should be read in

conjunction with the accompanying notes thereto.

The

transaction accounting adjustments are preliminary and are based upon available information and certain assumptions which management

believes are reasonable under the circumstances and which are described in the accompanying notes to the unaudited pro forma condensed

combined financial information. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma

condensed combined financial information. The final accounting treatment and related allocation will be determined when the final consideration

has been determined, detailed valuations and any other studies and calculations deemed necessary have been completed. Therefore, the

actual amounts recorded as of the completion of the Acquisition may also differ materially from the information presented in this unaudited

condensed combined pro forma information as a result of, among other factors, changes in Azora’s assets and liabilities that occurred

prior to the Closing.

Accounting Treatment for the Acquisition

The

Acquisition is accounted for using the asset acquisition method in accordance with GAAP because substantially all of the fair value is

concentrated in an in-process research and development (“IPR&D”) asset, an intangible asset. Under this method of accounting,

no goodwill is recognized. Upon consummation of the Acquisition, Adial owns 100% of Azora and is treated as the accounting acquiror.

Cash, working capital and other nominal assets and liabilities of Azora

are accounted for at their fair values. The remaining fair value of consideration transferred is allocated to the IPR&D, based on

the preliminary fair value allocated to Azora’s AT177 program, which was determined using the consideration transferred in the Acquisition

as a proxy for fair value. The consideration transferred represented a reasonable measure of the fair value of the acquired IPR&D

because it was negotiated in an arm’s-length transaction between willing market participants and substantially all of the acquired value

was attributable to the AT177 program. After recognizing the fair value of Azora’s remaining identifiable net assets, which approximated

their carrying values at Closing, the residual fair value of the consideration transferred was allocated to the acquired IPR&D asset.

Pursuant

to the merger agreement, Adial acquired Azora and Azora became a wholly owned subsidiary of Adial at Closing. The consideration transferred

and related transaction accounting adjustments are reflected in the unaudited pro forma condensed combined financial information based

on preliminary estimates and the terms of the merger agreement and related transaction documents.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The

adjustments and notes included in the unaudited pro forma condensed combined balance sheet as of March 31, 2026, based on preliminary

estimates that could change materially as additional information is obtained, are as follows:

Balance

Sheet Pro forma Transaction Accounting Adjustments:

Azora

pro forma transaction accounting adjustments:

a) To

reflect the issuance of $1.5 million of Azora notes in May and the extinguishment of Azora outstanding notes and related accrued

interest assumed in the Acquisition, including amounts exchanged into securities issued in the initial private placement, as applicable.

b) To

reflect Acquisition-related transaction costs incurred by Azora related to the completion of the merger that were not reflected in the

historical financial statements, including legal, advisory, audit and other professional fees, as applicable.

Adial

pro forma transaction accounting adjustments:

c) To

reflect Adial’s issuance of 544,454 shares of common stock under its ATM program for net proceeds of $0.9 million, and the grant

of 134,815 restricted stock awards to certain officers, employees and directors and options to purchase 9,185 shares of common stock

at an exercise price of $1.64 per share.

To reflect incremental compensation expense related to severance payments

recorded in general and administrative expenses of $0.9 million and stock based compensation expense recorded in general and administrative

expenses of $0.1 million, related to accelerated vesting of 43,835 restricted stock units and 4,478 stock options and post termination

exercise period extensions upon a qualified terminations, resulting from approval from the Adial Board that will

be incurred upon the closing of the Merger.

Acquisition

accounting adjustments:

e) To reflect the asset acquisition

and the resulting elimination of the equity of Azora and record the Acquisition of Azora (in thousands).

Investment in

Subsidiary

Adial

Series A

Preferred

Stock

Azora

Preferred

Stock and Common Stock

Additional

Paid-in

Capital

Accumulated

Other

Comprehensive

Income

Accumulated

Deficit

Total

Elimination of Azora’s historical equity balances as of March 31, 2026

$ —

$ (8,867 )

$ (109 )

$ (201 )

$ 9,575

$ 398

Exchange of Azora options for stock options of the Company

—

1,664

—

1,664

Issuance of Adial Common Stock

—

1,304

—

1,304

Expensing of Company transaction costs and FV convertible notes

—

2,208

Issuance of Adial Series A Preferred Stock

—

38,533

—

38,533

Investment in subsidiary

(44,107 )

—

(44,107 )

Pro forma adjustments

$ (44,107 )

$ 38,533

$ (8,867 )

$ 2,859

$ (201 )

$ 11,783

$ —

accordance with GAAP, Adial recognized the effects of the Acquisition based on the consideration transferred and the preliminary fair

value of Azora’s identifiable assets and liabilities at Closing, including the acquired IPR&D asset related to AT177.

The fair value of the remaining net assets of Azora approximated their

carrying values at the time of Closing. The fair value of acquired IPR&D is determined primarily using the consideration transferred

in the Acquisition as a proxy for fair value. The consideration transferred represented a reasonable measure of the fair value of the

acquired IPR&D because it was negotiated in an arm’s-length transaction between willing market participants and substantially all

of the acquired value was attributable to the AT177 program The preliminary estimate of fair value of acquired IPR&D may differ from

the final amount calculated after completing detailed valuation procedures, and any difference could have a material effect on the accompanying

unaudited pro forma condensed combined financial information.

To reflect the immediate expensing of acquired IPR&D with no alternative future use upon consummation of the Acquisition. The adjustment is based on the preliminary fair value allocated to Azora’s AT177 program, which was determined using the consideration transferred in the Acquisition as a proxy for fair value. The consideration transferred represented a reasonable measure of the fair value of the acquired IPR&D because it was negotiated in an arm’s-length transaction between willing market participants and substantially all of the acquired value was attributable to the AT177 program. After recognizing the fair value of Azora’s remaining identifiable net assets, which approximated their carrying values at Closing, the residual fair value of the consideration transferred was allocated to the acquired IPR&D asset. The amount allocated to the IPR&D asset was expensed upon acquisition as the asset has no alternative future use. The adjustment is recorded as an increase to acquired in-process research and development expense with a corresponding reduction to the intangible asset recognized in acquisition accounting.

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

The

adjustments included in the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026

and for the year ended December 31, 2025 reflect the Acquisition, the initial private placement, the extinguishment of Azora

notes, and related transaction accounting adjustments as if such transactions had occurred as of the beginning of the earliest period

presented, as follows:

Pro

forma notes:

Given

that Adial has reported net losses and applied a full valuation allowance for the reporting periods presented in the unaudited pro forma

condensed combined financial information, management assumed an effective income tax rate of 0%. No income tax benefit has been recorded

for the immediate expensing of acquired IPR&D or other transaction accounting adjustments because no incremental realizable tax benefit

is expected. Accordingly, no tax-related adjustments have been reflected in the unaudited pro forma condensed combined financial information.

Pro

forma Transaction Accounting Adjustments:

a) To

reflect Adial and Azora estimated acquisition-related advisory, legal, audit, regulatory and other professional fees related to the private

placement that were not recorded in its historical financial statements. These costs are presented as nonrecurring transaction costs

in the pro forma statements of operations and are assumed to have been incurred as of January 1, 2025.

b) To

reflect the immediate expensing of acquired IPR&D with no alternative future use upon consummation of the Acquisition. The adjustment

is based on the preliminary fair value allocated to Azora’s AT177 program, which was determined using the consideration transferred

in the Acquisition as a proxy for fair value. The consideration transferred represented a reasonable measure of the fair value of the

acquired IPR&D because it was negotiated in an arm’s-length transaction between willing market participants and substantially all

of the acquired value was attributable to the AT177 program. After recognizing the fair value of Azora’s remaining identifiable

net assets, which approximated their carrying values at Closing, the residual fair value of the consideration transferred was allocated

to the acquired IPR&D asset. The amount allocated to the IPR&D asset was expensed upon acquisition as the asset has no alternative

future use. The adjustment is recorded as an increase to acquired in-process research and development expense with a corresponding

reduction to the intangible asset recognized in acquisition accounting.

c) To eliminate historical

fair value changes associated with Azora convertible notes that were exchanged into Adial pre-funded warrants and liability

classified rights in connection with the Acquisition and initial private placement, as if such exchange occurred at January 1,

2026.

d) To reflect incremental compensation expense related to severance payments

recorded in general and administrative expenses of $0.9 million and stock based compensation expense recorded in general and administrative

expenses of $0.1 million, related to accelerated vesting of 43,835 restricted stock units and 4,478 stock options and post termination

exercise period extensions upon a qualified terminations, resulting from approval from the Adial Board that will be incurred upon the

closing of the Merger.

e) To recognize the loss of $6.1 million associated with the extinguishment of the Azora convertible

notes that were exchanges for Adial pre-funded warrants and liability classified rights in connection with the Acquisition and

initial private placement, as if such extinguishment occurred at January 1, 2025.

f) The pro forma combined basic and diluted net loss per share has been

adjusted to reflect the Acquisition and the Transactions, including the issuance of Adial common stock and Series A Non-Voting Convertible

Preferred Stock as merger consideration to former Azora stockholders and the issuance of pre-funded warrants in the initial private placement,

as if such transactions had occurred as of January 1, 2025. The table below assumes conversion of the Series A Non-Voting Convertible

Preferred Stock into Adial common stock and the exercise of June Prefunded Warrants into Adial common stock. For periods in which Adial,

Azora, or the combined company reported a net loss, diluted loss per share is the same as basic loss per share because potential dilutive

shares are not assumed to have been issued when their effect would be anti-dilutive.

For the

Three Months

Ended

March 31,

2026

For the

Year

Ended

December 31,

2025

Basic and Diluted

(in thousands, except shares and per share amounts)

Pro forma net loss

$ (2,224 )

$ (64,499 )

Weighted average shares of common stock outstanding

1,370,109

668,630

Conversion of Azora common shares into Adial common shares

437,421

Conversion of Azora preferred stock into Adial common shares

12,930,617

Pre-Funded Warrants issued in connection with the PIPE Financing

11,780,948

Pro forma weighted average number of common stock

14,738,147

14,036,668

Pro forma net loss per share

$ (0.15 )

$ (4.60 )

The

following table reflects the outstanding dilutive potential shares that are excluded from the calculation of diluted net loss per share

due to their anti-dilutive effect.

For the

Three Months

Ended

March 31,

2026

For the

Year

Ended

December 31,

2025

Adial warrants to purchase common stock

1,240,480

Adial options to purchase Adial common stock

47,220

Adial unvested restricted stock

1,449

Liability warrant rights issued in connection with the PIPE Financing

23,561,896

Assumed Azora Options to be issued to Azora Option holders in connection with

the Acquisition

1,177,782

26,027,378

26,028,827

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Jun. 11, 2026

Cover [Abstract]

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Amendment Description

This Amendment No.1 on Form 8-K/A (this “Amendment”)

amends that Current Report on Form 8-K filed by Adial Pharmaceuticals, Inc., a Delaware corporation (the “Company”), with

the Securities and Exchange Commission (the “SEC”) on June 11, 2026 (the “Original Form 8-K”). The Original Form

8-K was filed to, among other things, report the Company’s acquisition (the “Merger”) of Azora Therapeutics, Inc., a

Delaware corporation (“Azora”), pursuant to that Agreement and Plan of Merger, dated June 11, 2026 (the “Merger Agreement”),

by and among the Company, Adial Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, Adial Second Merger

Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, and Azora.

Document Period End Date

Jun. 11, 2026

Entity File Number

001-38323

Entity Registrant Name

Adial Pharmaceuticals, Inc.

Entity Central Index Key

0001513525

Entity Tax Identification Number

82-3074668

Entity Incorporation, State or Country Code

Entity Address, Address Line One

4870 Sadler Road

Entity Address, Address Line Two

Ste 300

Entity Address, City or Town

Glen Allen

Entity Address, State or Province

Entity Address, Postal Zip Code

23060

City Area Code

804

Local Phone Number

487-8196

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Trading Symbol

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Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.

+ References

No definition available.

+ Details

Name:

dei_EntityFileNumber

Namespace Prefix:

dei_

Data Type:

dei:fileNumberItemType

Balance Type:

Period Type:

duration

- Definition

Two-character EDGAR code representing the state or country of incorporation.

+ References

No definition available.

+ Details

Name:

dei_EntityIncorporationStateCountryCode

Namespace Prefix:

dei_

Data Type:

dei:edgarStateCountryItemType

Balance Type:

Period Type:

duration

- Definition

The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b-2

+ Details

Name:

dei_EntityRegistrantName

Namespace Prefix:

dei_

Data Type:

xbrli:normalizedStringItemType

Balance Type:

Period Type:

duration

- Definition

The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b-2

+ Details

Name:

dei_EntityTaxIdentificationNumber

Namespace Prefix:

dei_

Data Type:

dei:employerIdItemType

Balance Type:

Period Type:

duration

- Definition

Local phone number for entity.

+ References

No definition available.

+ Details

Name:

dei_LocalPhoneNumber

Namespace Prefix:

dei_

Data Type:

xbrli:normalizedStringItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 13e

-Subsection 4c

+ Details

Name:

dei_PreCommencementIssuerTenderOffer

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 14d

-Subsection 2b

+ Details

Name:

dei_PreCommencementTenderOffer

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Title of a 12(b) registered security.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b

+ Details

Name:

dei_Security12bTitle

Namespace Prefix:

dei_

Data Type:

dei:securityTitleItemType

Balance Type:

Period Type:

duration

- Definition

Name of the Exchange on which a security is registered.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection d1-1

+ Details

Name:

dei_SecurityExchangeName

Namespace Prefix:

dei_

Data Type:

dei:edgarExchangeCodeItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 14a

-Subsection 12

+ Details

Name:

dei_SolicitingMaterial

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Trading symbol of an instrument as listed on an exchange.

+ References

No definition available.

+ Details

Name:

dei_TradingSymbol

Namespace Prefix:

dei_

Data Type:

dei:tradingSymbolItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Securities Act

-Number 230

-Section 425

+ Details

Name:

dei_WrittenCommunications

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration