Business Context and Reporting Period
This Form 8-K Current Report is filed by Adial Pharmaceuticals, Inc. (ADIL), a Delaware corporation and emerging growth company, with a reporting date of April 28, 2025. The filing primarily addresses a change in the Company's independent registered public accounting firm.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity for the current period. However, it references the following financial context:
- Going Concern: The independent auditor's reports for fiscal years ended December 31, 2024, and 2023 included an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.
- Internal Controls: The Company reported material weaknesses in internal control over financial reporting in its 2024 Form 10-K.
Material Changes
The primary material change reported is the resignation of Marcum LLP as the Company's independent registered public accounting firm, effective April 28, 2025. Marcum had served as the auditor through this date following the acquisition of its attest business by CBIZ CPAs P.C. on November 1, 2024. Consequently, CBIZ CPAs has been engaged to serve as the independent registered public accounting firm for the year ending December 31, 2025, effective immediately.
Outlook, Risks, and Contingencies
Audit Disagreements and Reportable Events:
- There were no disagreements between the Company and Marcum regarding accounting principles, practices, or audit scope during the two most recent fiscal years or the interim period through April 28, 2025.
- There were no "reportable events" other than the previously disclosed material weaknesses in internal controls.
Identified Material Weaknesses (from 2024 10-K):
- Lack of finalized assessment under the COSO framework.
- Inadequately documented policies and procedures.
- Lack of proper approval, review, and documentation processes.
- Insufficient GAAP experience regarding complex transactions and ineffective review processes.
- Deficiencies in IT general controls (risk assessment, design, and policies).
- Insufficient segregation of duties.
Consultation with New Auditor: The Company confirmed that neither it nor anyone on its behalf consulted with CBIZ CPAs regarding accounting principles or audit opinions prior to the engagement.
Investor Verification Checklist
- Verify the status of the "substantial doubt about going concern" noted in the 2023 and 2024 audit reports.
- Review the Company's remediation plan for the six specific material weaknesses in internal controls disclosed in the 2024 Form 10-K.
- Confirm the transition timeline and initial findings of the new auditor, CBIZ CPAs, for the 2025 fiscal year.
- Examine the letter from Marcum LLP (Exhibit 16.1) for any additional context regarding the resignation.