Filing Details
- Accession Number:
- 0001213900-18-015602
- Form Type:
- 13D Filing
- Publication Date:
- 2018-11-14 06:30:24
- Filed By:
- Newman James W. Jr.
- Company:
- Adial Pharmaceuticals Inc. (NASDAQ:ADIL)
- Filing Date:
- 2018-11-14
- SEC Url:
- 13D Filing
Please notice the below summary table is generated without human intervention and may contain errors. Please refer to the complete filing displayed below for exact figures.
| Name | Sole Voting Power | Shared Voting Power | Sole Dispositive Power | Shared Dispositive Power | Aggregate Amount Owned Power | Percent of Class |
|---|---|---|---|---|---|---|
| James W. Newman, Jr | 22,790 | 660,274 | 22,790 | 660,274 | 683,064 | 9.78% |
| Virga Ventures | 0 | 478,523 | 0 | 478,523 | 478,523 | 6.96% |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ADIAL PHARMACEUTICALS, INC.
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
00688A 106
(CUSIP Number)
James W. Newman, Jr.
c/o Adial Pharmaceuticals, Inc.
1180 Seminole Trail, Suite 495
Charlottesville, Virginia 22901
(434) 422-9800
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
November 12, 2018
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| CUSIP No. 00688A106 | 13D | Page 2 of 8 Pages |
1
| NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
James W. Newman, Jr. | ||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | ||
| (a) | ☐ | ||
| (b) | ☐ | ||
3
| SEC USE ONLY
| ||
4
| SOURCE OF FUNDS
PF | ||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | ||
| ☐ | |||
| Not Applicable | |||
6
| CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America | ||
NUMBER OF | 7 | SOLE VOTING POWER
22,790 |
SHARES BENEFICIALLY OWNED BY | 8 | SHARED VOTING POWER
660,274 |
EACH REPORTING PERSON | 9 | SOLE DISPOSITIVE POWER
22,790 |
WITH
| 10 | SHARED DISPOSITIVE POWER
660,274 |
11
| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
683,064 | ||
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ||
| ☐ | |||
13
| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.78% | ||
14
| TYPE OF REPORTING PERSON
IN | ||
| CUSIP No. 00688A106 | 13D | Page 3 of 8 Pages |
1
| NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Virga Ventures, LLC | ||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | ||
| (a) | ☐ | ||
| (b) | ☐ | ||
3
| SEC USE ONLY
| ||
4
| SOURCE OF FUNDS
OO | ||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | ||
| ☐ | |||
| Not Applicable | |||
6
| CITIZENSHIP OR PLACE OF ORGANIZATION
Limited liability company formed under the laws of the State of Virginia | ||
NUMBER OF | 7 | SOLE VOTING POWER
0 |
SHARES BENEFICIALLY OWNED BY | 8 | SHARED VOTING POWER
478,523 |
EACH REPORTING PERSON | 9 | SOLE DISPOSITIVE POWER
0 |
WITH
| 10 | SHARED DISPOSITIVE POWER
478,523 |
11
| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
478,523 | ||
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ||
| ☐ | |||
13
| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.96% | ||
14
| TYPE OF REPORTING PERSON
OO | ||
| CUSIP No. 00688A106 | 13D | Page 4 of 8 Pages |
Item 1. Security and Issuer.
This Schedule 13D (the “Schedule 13D”) relates to the shares of common stock, par value $0.001 per share (the “Common Stock”), of Adial Pharmaceuticals, Inc., a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 1180 Seminole Trail, Suite 495, Charlottesville, Virginia 22901.
Item 2. Identity and Background.
(a), (f) The persons filing this statement are James W. Newman Jr. and Virga Ventures, LLC, a Virginia limited liability company. Mr. Newman has control over Virga Ventures, LLC and both are located in Charlottesville, Virginia.
(b) The principal business address of Mr. Newman and Virga Ventures, LLC is 2246 Ivy Road, Suite 17, Charlottesville, Virginia 22903. Mr. Newman and Virga Ventures, LLC are referred to as the “Reporting Persons” in this Schedule 13D.
(c) The present principal occupation of Mr. Newman is Chairman of the Board and President of Medical Predictive Science Corporation, a medical device company.
(d) During the last five years, neither of the Reporting Persons has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither of the Reporting Persons has been a party to any civil proceeding commenced before a judicial or administrative body of competent jurisdiction as a result of which the Reporting Persons was or is now subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Mr. Newman is a citizen of the United States of America. Virga Ventures, LLC is a limited liability company organized under the laws of the State of Virginia.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Persons used personal funds to acquire the securities described in Item 4 of this Schedule 13D other than shares of Common Stock issued as compensation for services rendered. The stock options granted to Mr. Newman on January 1, 2018 were awarded as compensation for services rendered to the Issuer as a member of the board of directors.
Item 4. Purpose of the Transaction.
The purpose of the transactions described in this Schedule 13D is solely for investment.
In connection with the initial public offering (the “IPO”) of the Issuer, ADial Pharmaceuticals, L.L.C. was converted from a Virginia limited liability company into a Virginia corporation, APL Conversion Corp., which conversion was consummated on October 3, 2017. Thereafter, on October 11, 2017 the Issuer was reincorporated in Delaware by merging the Virginia corporation with and into the Issuer, which was incorporated on October 5, 2017 and as a wholly owned subsidiary of the Virginia corporation. In order to consummate the conversion, a certificate of conversion was filed with the Secretary of State of the State of Virginia. In order to consummate the reincorporation, certificates of merger were filed with the Secretary of State of the States of Delaware and Virginia. In connection with the corporate conversion/reincorporation, all outstanding Class A units, Class B units, and Profits Interest Units of ADial Pharmaceuticals, LLC (collectively, the “LLC Units”) were automatically converted into shares of common stock of the Virginia corporation and then into an aggregate of 3,268,005 shares of common stock of the Issuer, and the Issuer succeeded to the business of ADial Pharmaceuticals, L.L.C.
Mr. Newman is the sole member of Virga Ventures, LLC, the general partner of Ivy Cottage Group, LLC and Rountop Limited Partnership, LLP, and Trustee of the Newman GST Trust, each of which entities owns securities of the Issuer. Mr. Newman has control over disposition and voting the decisions by such entities with respect to securities of the Issuer owned by such entities and is an indirect beneficial owner of such securities.
| CUSIP No. 00688A106 | 13D | Page 5 of 8 Pages |
For the LLC Units held by each of Virga Ventures, LLC, Ivy Cottage Group, LLC, Rountop Limited Partnership, LLP, and the Newman GST Trust, for which each paid an aggregate of $268,405, $59,055, $45,620 and $68,110, respectively, from working capital funds (i) Virga Ventures received in the corporate conversion/reincorporation 36,704 shares of Common Stock and warrants to purchase 10,389 shares of Common Stock; (ii) the Newman GST Trust FBO James W. Newman Jr. received in the corporate conversion/reincorporation 11,229 shares of Common Stock and warrants to purchase 2,372 shares of Common Stock; (iii) Ivy Cottage Group received in the corporate conversion/reincorporation 10,043 shares of Common Stock and warrants to purchase 1,186 shares of Common Stock; and (iv) Rountop Limited Partnership, LLP received in the corporate conversion/reincorporation 3,288 shares of Common Stock and warrants to purchase 3,415 shares of Common Stock.
On January 1, 2018, Mr. Newman received an option to purchase an aggregate of 5,580 shares of Common Stock at an exercise price of $5.70 per share (which options terminate on June 30, 2027), of which an aggregate of 2,790 shares of Common Stock will vest within 60 days of November 12, 2018 (the options vested 1/6th of the grant on January 1, 2018 with the remaining shares vesting 1/36th on the first day of each month over the remaining 30 months).
On February 22, 2018 and March 1, 2018, the Issuer entered into Security Purchase Agreements pursuant to which it issued senior notes (the “Senior Notes”) in the aggregate principal amount of $510,000 to a number of its directors, including Mr. Newman, and entities that the directors control as well as two consultants. The Senior Notes ranked pari passu with respect to seniority as to payment to one another and senior as to payment as to all other outstanding debt, and was secured by a lien on substantially all of the Issuer’s assets. The Senior Notes bore interest at rate of 18% per annum and were payable upon the closing of the IPO. Additionally, upon consummation of the IPO, the Issuer agreed to issue to holders of the Senior Notes: (i) warrants to purchase a number of units equal to 400% of the principal amount of the Senior Notes divided by the price per unit of such next financing; and (ii) a number of units equal to 400% of the principal amount of the Senior Notes divided by the price per unit of such next financing. The warrants have an exercise price equal to the price per share in the IPO and are exercisable for a term of five years. The Issuer also agreed to issue to each holder of the Senior Notes (A) warrants to purchase a number of units equal to 400% of the principal amount of the Senior Notes issued to such holder divided by the price per unit in the IPO; and (B) a number of units equal to 400% of the principal amount of the Senior Notes issued to such holder divided by the price per unit in the IPO.
On July 31, 2018, upon consummation of the IPO, (i) the Newman GST Trust FBO James W. Newman, Jr. received 29,931 shares of Common Stock and a warrant to purchase 29,931 shares of Common Stock exercisable for $6.25 per share, which shares and warrants were received upon automatic conversion of a convertible note in the principal amount of $10,000 together with interest accrued thereon at the note conversion price of $0.44 per share; (ii) Virga Ventures, LLC received 21,715 shares of Common Stock and a warrant to purchase 21,715 shares of Common Stock exercisable for $6.25 per share, which shares and warrants were received upon automatic conversion of a convertible note in the principal amount of $7,255.02 together with interest accrued thereon at the note conversion price of $0.44 per share; and (iii) Ivy Cottage Group, LLC received 5,178 shares of Common Stock and a warrant to purchase 5,178 shares of Common Stock exercisable for $6.25 per share, which shares and warrants were received upon automatic conversion of a convertible note in the principal amount of $1,729,95 together with interest accrued thereon at the note conversion price of $0.44 per share. The promissory notes were issued in September 2016 in a private placement in which the Issuer issued an aggregate principal amount of $235,000 promissory notes including the foregoing notes and notes issued to officers and directors of the Issuer.
On July 31, 2018, Virga Ventures, LLC and the James W. Newman Roth IRA each purchased 10,000 units (the “Units”) in the IPO at the initial public offering price of $5.00 per Unit, which corresponds to a price of $4.99 per share of Common Stock and $0.01 per warrant. Each Unit consisted of one share of Common Stock and a warrant to purchase one share of Common Stock at an exercise price of $6.25 per share, exercisable immediately and expiring five years from the date of issuance. The 10,000 shares of Common Stock and warrants to purchase 10,000 shares of Common Stock that each purchased were immediately separable upon issuance of the Units in the IPO.
In addition, on July 31, 2018, upon consummation of the IPO, pursuant to the terms of a Securities Purchase Agreement, dated February 22, 2018 (the “Securities Purchase Agreement”), Virga Ventures, LLC received (i) 92,000 Units consisting of 92,000 shares of Common Stock and warrants to purchase 92,000 shares of Common Stock at an exercise price of $6.25 per share, and (ii) warrants to purchase 92,000 Units (the “Virga Unit Warrants”), which Units consisted of 92,000 shares of Common Stock and warrants to purchase 92,000 shares of Common Stock, such that if all of the Virga Unit Warrants were completely exercised, 184,000 shares of Common Stock would be issued to Virga Ventures, LLC. Furthermore, pursuant to the Securities Purchase Agreement, Ivy Cottage Group, LLC received (A) 20,000 Units consisting of 20,000 shares of Common Stock and warrants to purchase 20,000 shares of Common Stock at an exercise price of $6.25 per share, and (B) warrants to purchase 20,000 Units (the “Ivy Cottage Unit Warrants”), which Units consisted of 20,000 shares of Common Stock and warrants to purchase 20,000 shares of Common Stock, such that if all of the Ivy Cottage Unit Warrants were completely exercised, 40,000 shares of Common Stock would be issued to Ivy Cottage Group, LLC.
| CUSIP No. 00688A106 | 13D | Page 6 of 8 Pages |
On November 12, 2018 pursuant to an Exchange Agreement: (i) Ivy Cottage Group, LLC exchanged the 20,000 Ivy Cottage Unit Warrants for (A) a warrant to purchase 20,000 shares of Common Stock with an exercise price of $5.00 per share, and (B) a warrant to purchase 20,000 shares of Common Stock at an exercise price of $6.25 per share, and (ii) Virga Ventures, LLC exchanged the 92,000 Virga Unit Warrants for (A) a warrant to purchase 92,000 shares of Common Stock with an exercise price of $5.00 per share, and a warrant to purchase 92,000 shares of Common Stock at an exercise price of $6.25 per share.
The foregoing descriptions of the terms of the Form of 2016 Convertible Promissory Note (2016 Offering), warrants issued as part of the Units in the IPO, the Securities Purchase Agreement, the Backstop Commitment Agreement and the warrants acquired on November 12, 2018 are qualified in their entirety by reference to the full text of the forms of such documents, copies of which are included as Exhibits 2, 3, 4, 5 and 6, respectively, to this Schedule 13D and are incorporated by reference herein.
Item 5. Interest in Securities of the Issuer.
The information in this Item 5 is provided as of the date hereof and is based on 6,556,249 shares of Common Stock outstanding as of November 12, 2018.
Mr. Newman is the beneficial owner of, and has the sole power to vote or direct the vote and to dispose or direct the disposition of: (a) 10,000 shares of Common Stock and warrants to purchase an aggregate of 10,000 shares of Common Stock; and (b) options to purchase an aggregate of 5,580 shares of Common Stock, of which 2,790 shares are vested as of November 12, 2018 or vest within 60 days thereof.
In addition, Mr. Newman is deemed to be the beneficial owner of, and has shared power to vote or direct the vote and to dispose or direct the disposition of 240,088 shares of Common Stock and warrants to purchase 420,186 shares of Common Stock, which shares and warrants are owned by Virga Ventures, LLC, Ivy Cottage Group, LLC, Rountop Limited Partnership, LLP, and the Newman GST Trust.
Virga Ventures, LLC is the beneficial owner of, and has the sole power to vote or direct the vote and to dispose or direct the disposition of zero shares.
Virga Ventures, LLC and Mr. Newman are deemed to be the beneficial owner of, and have shared power to vote or direct the vote and to dispose or direct the disposition of 160,419 shares of Common Stock and warrants to purchase 318,104 shares of Common Stock, due to Mr. Newman’s control of Virga Ventures, LLC.
As of the date hereof, the aggregate number and percentage of shares of Common Stock beneficially owned by Mr. Newman and Virga Ventures, LLC (on the basis of 6,556,249 shares of Common Stock outstanding as of November 12, 2018) are as follows:
| (a) | Number of shares of Common Stock beneficially owned by Mr. Newman:
683,064 | Percent of class of Common Stock:
9.78% |
| Number of shares of Common Stock beneficially owned by Virga Ventures, LLC:
478,523 | Percent of class of Common Stock:
6.96% |
| CUSIP No. 00688A106 | 13D | Page 7 of 8 Pages |
| (b) | Number of shares of Common Stock as to which Mr. Newman has: |
| (i) | Sole power to vote or to direct the vote: | 22,790 | |
| (ii) | Shared power to vote or to direct the vote: | 660,274 | |
| (iii) | Sole power to dispose or to direct the disposition of: | 22,790 | |
| (iv) | Shared power to dispose or to direct the disposition of: | 660,274 |
Number of shares of Common Stock as to which Virga Ventures, LLC has:
| (i) | Sole power to vote or to direct the vote: | 0 | |
| (ii) | Shared power to vote or to direct the vote: | 478,523 | |
| (iii) | Sole power to dispose or to direct the disposition of: | 0 | |
| (iv) | Shared power to dispose or to direct the disposition of: | 478,523 |
| (c) | See Item 4 and Annex A hereto, both of which are incorporated by reference herein. |
| (d) | Not applicable. |
| (e) | Not applicable. |
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
See the responses to Item 4 and Item 5, which are incorporated by reference herein.
Item 7. Material to be filed as Exhibits.
| CUSIP No. 00688A106 | 13D | Page 8 of 8 Pages |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: November 13, 2018
| /s/ James W. Newman, Jr. | |
| James W. Newman, Jr. |
| Virga Ventures, LLC | ||
| By: | /s/ James W. Newman, Jr. | |
| Name: | James W. Newman, Jr. | |
| Title: | Sole Member | |
Annex A
Transactions by the Reporting Person During the Past Sixty Days
| Date of Transaction | Number of Securities | Price per Share | ||
| November 12, 2018 | Acquired warrants to purchase 20,000 shares of Common Stock | * | ||
| November 12, 2018 | Acquired warrants to purchase 20,000 shares of Common Stock | * | ||
| November 12, 2018 | Acquired warrants to purchase 92,000 shares of Common Stock | * | ||
| November 12, 2018 | Acquired warrants to purchase 92,000 shares of Common Stock | * |
* As described in this Schedule 13D, on November 12, 2018: (i) Virga Ventures, LLC exchanged the 92,000 Virga Unit Warrants for (A) a warrant to purchase 92,000 shares of Common Stock with an exercise price of $5.00 per share, and (B) a warrant to purchase 92,000 shares of Common Stock at an exercise price of $6.25 per share, and (ii) Ivy Cottage Group, LLCC exchanged the 20,000 Ivy Cottage Unit Warrants for (A) a warrant to purchase 20,000 shares of Common Stock with an exercise price of $5.00 per share, and a warrant to purchase 20,000 shares of Common Stock at an exercise price of $6.25 per share.
Exhibit 1
JOINT FILING AGREEMENT
JOINT FILING AGREEMENT, dated as of the 13th day of November, 2018, by and between James W. Newman, Jr. and Virga Ventures, LLC (together, the “Joint Filers”).
Whereas, pursuant to Rule 13d-1(k) under Securities Exchange Act of 1934, as amended (the “Exchange Act”), the parties hereto desire to satisfy any filing obligations under Section 13(d) of the Exchange Act by a single joint filing:
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Joint Filers hereby agree and represent as follows:
| 1. | Schedule 13D with respect to the common stock, par value $0.01 per share, of Adial Pharmaceuticals, Inc., a Delaware corporation (to which this Joint Filing Agreement is an exhibit) is filed on behalf of each of the Joint Filers. | |
| 2. | Each of the Joint Filers is eligible to use Schedule 13D for the filing of information therein contained. | |
| 3. | Each of the Joint Filers is responsible for the timely filing of Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein, provided that each such person is not responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate. |
IN WITNESS WHEREOF, the undersigned have caused this Joint Filing Agreement to be duly executed and delivered as of the date first above written.
| /s/ James W. Newman, Jr. | ||
| James W. Newman, Jr. | ||
| Date: November 13, 2018 | ||
Virga Ventures, LLC | ||
| By: | /s/ James W. Newman, Jr. | |
| Name: | James W. Newman, Jr. | |
| Title: | Sole Member | |
| Date: | November 13, 2018 | |