BIOVIE INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We have evaluated, with the participation of our principal executive and our principle financial officer, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. - 33 - Table of Contents Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2021 using the criteria established in Internal Control Integrated Framework (“2013 Framework”) issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Based on our evaluation using those criteria, our management has concluded that, as of June 30, 2021, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles for the reasons discussed above. Changes in Internal Control Over Financial Reporting There were no changes in our internal controls over financial reporting during quarter ended June 30, 2021, that materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. - 34 - Table of Contents PART III . ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended June 30, 2021 and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended June 30, 2021 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended June 30, 2021 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended June 30, 2021 and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended June 30, 2021 and is incorporated herein by reference. - 35 - Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1),(2) Financial Statements The Financial Statements listed on page F-1 of this document are filed as part of this filing. (a)(3) Exhibits The following is a list of exhibits filed as a part of this report: Exhibit Number Description of Document 2.1 Agreement and Plan of Merger, dated April 11, 2016, among the Company, LAT Acquisition Corp and LAT Pharma, LLC (incorporated by reference to Exhibit 2.1 the Company’s Current Report on Form 8-K filed on April 15, 2016). 3.1 Articles of Incorporation of the Company as filed with the Secretary of State of Nevada (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form S-1 filed on August 15, 2013, File No. 333-190635). 3.2 Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 22, 2016). 3.3 Certificate of Amendment to Articles of Incorporation (incorporated by reference to Appendix A to the Company’s Information Statement on Schedule 14C filed on July 13, 2018). 3.4 Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 3, 2018). 3.5 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s registration statement on Form S-1 filed on August 15, 2013, File No. 333-190635). 3.6 Certificate of Amendment to Articles of Incorporation 4.1 Specimen Certificate representing shares of Class A Common Stock. (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1, File No. 333-231136) 4.2 Form of Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on September 25, 2019). 4.3 Form of 10% OID Convertible Delayed Draw Debenture (incorporated by reference to Exhibit 4.1 the Company’s Current Report on Form 8-K filed on September 25, 2019). 4.4 Description of Securities 10.1 Securities Purchase Agreement, dated as of July 3, 2018, by and among BioVie Inc., Acuitas Group Holdings, LLC and the Purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 3, 2018). 10.2 Employment Agreement between Jonathan Adams and the Company dated, April 11, 2016. (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, File No. 333-231136) 10.4 Amendment No. 1 to Employment Agreement between Jonathan Adams and the Company dated July 3, 2018. (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1, File No. 333-231136) 10.5 Letter Agreement between Acuitas Group Holdings, LLC and the Company dated June 24, 2019. (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1, File No. 333-231136) 10.6 BioVie Inc. 2019 Omnibus Equity Incentive Plan (incorporated by reference to Appendix D to the Definitive Information Statement on Schedule 14C, filed on May 8, 2019) 10.7 Securities Purchase Agreement dated as of September 24, 2019 by and among BioVie Inc. and Acuitas Group Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 25, 2019) 10.8 Amendment to Securities Purchase Agreement, dated as of October 9, 2019, by and between the Company and Acuitas Group Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 9, 2019) 10.9 Biovie Inc. Letter Agreement with Acuitas Group Holdings, LLC dated as of February 10, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 13, 2020). 10.10 Biovie Inc. Letter Agreement with Acuitas Group Holdings, LLC dated as of April 8, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2020). 10.11 Biovie Inc. Letter Agreement with Acuitas Group Holdings, LLC dated as of July 14, 2020. (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1, File No. 333-231136) 10.12 Asset Purchase Agreement by and Among BioVie,Inc - Buyer and Neurmedix, Inc - Seller and Acuitas Group Holdings as Gauarantor of April 27, 2021 filed on Form 8-K on April 27, 2021 10.13 Amendment No. 1 of the Asset Purchase Agreement dated May 9, 2021 filed on Form 8-K on May 10, 2021 14.1 Code of Conduct and Ethics of BioVie Inc. (incorporated by reference to Exhibit 14.1 to the Company’s Registration Statement on Form S-1, File No. 333-231136). 23.1 Consent of Independent Registered Public Accounting Firm - EisnerAmper LLP* 31.1 Rule 13a-14(a) Certification 31.2 Rule 13a-14(a) Certification 32.1 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Calculation Linkbase Document 101.LAB XBRL Taxonomy Label Linkbase Document 101.PRE XBRL Taxonomy Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document - 36 - Table of Contents Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BIOVIE INC. By: /s/ Cuong Do Name: Cuong Do Title: Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated. Person Capacity Date /s/ Cuong Do Chief Executive Officer August 30, 2021 Cuong Do (Principal Executive Officer) /s/ Joanne Wendy Kim Chief Financial Officer August 30, 2021 Joanne Wendy Kim (Principal Financial Officer) /s/ Terren Piezer Chairman August 30, 2021 Terren Piezer /s/ Jim Lang Director August 30, 2021 Jim Lang /s/ Michael Sherman Director August 30, 2021 Michael Sherman /s/ Richard J. Berman Director August 30, 2021 Richard J. Berman /s/ Steve Gorlin Director August 30, 2021 Steve Gorlin /s/ Robert Hariri Director August 30, 2021 Robert Hariri /s/ Sigmund Rogich Director August 30, 2021 Sigmund Rogich - 37 - Table of Contents BioVie Inc. Index to Financial Statements Report of Independent Registered Public Accounting Firm – EisnerAmper LLP F-2 Financial Statements: Balance Sheets F-4 Statements of Operations F-5 Statements of Changes in Stockholders’ Equity (Deficit) F-6 Statements of Cash Flows F-7 Notes to Financial Statements F-8 F- 1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of BioVie Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Biovie Inc. (the “Company”) as of June 30, 2021 and 2020, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s recurring losses from operations and negative cash flows from operating activities raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. F- 2 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Related Party Transactions As described in note 5 to the financial statements, the Company has entered into agreements with a related party. As part of these agreements, the Company is required to issue common stock and, at times, warrants to the related party. The purchase option to the related party for the additional securities resulted in a deemed dividend of approximately $53 million recorded on the June 30, 2021 balance sheet. Additionally, in accordance with the Asset Purchase Agreement identified in note 5, the Company recorded approximately $130.6 million of in-process research and development expenses on the June 30, 2021 statement of operations and $124.3 million of common stock and additional paid-in-capital and cash paid to related party of approximately $2.3 million on the June 30, 2021 balance sheet. We identified management’s related party transactions as a critical audit matter due to the significance of transactions occurring throughout the year and management’s process to ensure all transactions are recorded and disclosed accurately. This in turn led to a high degree of auditor judgment, subjectivity and effort in applying the procedures related to those transactions. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. We obtained an understanding and evaluated the design of the controls over the Company’s process to identify, account for and disclose related party transactions. We performed procedures to test the common stock, additional paid-in-capital, deemed dividend and in-process research and development expenses balances related to related parties transactions at the balance sheet date. Our audit procedures also included, among others, reading agreements and subsequent amendments, and testing invoices to related parties to ensure expenses are accurate and proper approval from management and audit committee was received. We also made direct inquiries of financial personnel on the status of all agreements to ensure the population of amendments or new agreements entered into was complete and that these items were properly accounted for and disclosed. Additionally, we reviewed all board minutes to ensure completeness of related party transactions. /s/ EisnerAmper LLP We have served as the Company’s auditor since 2019. EISNERAMPER LLP Iselin, New Jersey August 30, 2021 F- 3 Table of Contents BioVie Inc. Balance Sheets June 30, June 30, 2021 2020 ASSETS CURRENT ASSETS: Cash $ 4,511,642 $ 37,195 Other assets 93,487 375,785 Total current assets 4,605,129 412,980 OTHER ASSETS: Intangible assets, net 1,095,849 1,325,226 Goodwill 345,711 345,711 Total other assets 1,441,560 1,670,937 TOTAL ASSETS $ 6,046,689 $ 2,083,917 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable and accrued expenses $ 996,374 $ 1,259,206 Derivative liability - warrants — 16,411,504 Derivative liability - conversion option on convertible debenture — 5,000,800 Convertible debenture - related party, net of unearned discount of $ 0 and $ 462,864 and capitalized accrued interest of $ 0 and $ 48,407 at June 30, 2021 and June 30, 2020, respectively — 848,543 Total current liabilities 996,374 23,520,053 Loan Payable — 62,500 TOTAL LIABILITIES 996,374 23,582,553 Commitments and contingencies (Note 8) STOCKHOLDERS’ EQUITY (DEFICIT): Preferred stock; $ 0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding — — Common stock, $ 0.0001 par value; 800,000,000 shares authorized at June 30, 2021 and June 30, 2020, respectively; 22,333,324 and 5,204,392 shares issued and outstanding at June 30, 2021 and June 30, 2020, respectively 2,232 520 Additional paid in capital 229,933,505 19,538,742 Accumulated deficit ( 224,885,422 ) ( 41,037,898 ) Total stockholders’ equity (deficit) 5,050,315 ( 21,498,636 ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 6,046,689 $ 2,083,917 The accompanying notes are an integral part of the financial statements. F- 4 Table of Contents BioVie Inc. Statements of Operations Year ended Year ended June 30, 2021 June 30, 2020 OPERATING EXPENSES: Amortization $ 229,377 $ 229,377 Research and development expenses 133,187,506 1,150,581 Selling, general and administrative expenses 4,637,256 1,312,930 TOTAL OPERATING EXPENSES 138,054,139 2,692,888 LOSS FROM OPERATIONS ( 138,054,139 ) ( 2,692,888 ) OTHER EXPENSE (INCOME) EXPENSE: Change in fair value of derivative liabilities ( 8,279,919 ) 9,211,686 Gain on extinguishment of debt ( 62,500 ) — Interest expense 559,455 4,772,429 Interest income ( 21,971 ) ( 234 ) TOTAL OTHER (INCOME) EXPENSE, NET ( 7,804,935 ) 13,983,881 NET LOSS $ ( 130,249,204 ) $ ( 16,676,768 ) Deemed dividends - related party 53,598,320 17,099,058 NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 183,847,524 ) $ ( 33,775,826 ) NET LOSS PER COMMON SHARE - Basic $ ( 14.82 ) $ ( 6.85 ) - Diluted $ ( 14.82 ) $ ( 6.85 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic 12,403,159 4,929,497 - Diluted 12,403,159 4,929,497 The accompanying notes are an integral part of the financial statements. F- 5 Table of Contents BioVie Inc. Statements of Changes in Stockholders’ Equity (Deficit) For the Years Ended June 30, 2021 and 2020 Additional Total Common Stock Common Stock Paid in Accumulated Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance, June 30, 2019 4,058,724 $ 406 $ 9,392,573 $ ( 7,262,072 ) $ 2,130,907 Issuance of commitment shares 1,125,000 112 10,068,638 — 10,068,750 Deemed dividend for commitment shares — — — ( 17,099,058 ) ( 17,099,058 ) Stock option compensation — — 24,846 — 24,846 Issuance of shares for services 11,200 1 39,199 — 39,200 Issuance of shares for interest payment 4,422 — 13,487 — 13,487 Cashless exercise of options 5,046 1 ( 1 ) — — Net loss — — — ( 16,676,768 ) ( 16,676,768 ) Balance, June 30, 2020 5,204,392 $ 520 $ 19,538,742 $ ( 41,037,898 ) $ ( 21,498,636 ) Proceeds from issuance of common stock 1,799,980 180 15,627,830 — 15,628,010 Redemption of warrants - related party 1,549,750 155 13,132,230 — 13,132,385 Deemed dividend for purchase option - related party 5,359,832 536 53,597,784 ( 53,598,320 ) — Cashless exercise of options and warrants 3,238 — — — — Stock-based compensation — — 3,019,809 — 3,019,809 Proceeds from exercise of warrants 54,824 5 685,297 — 685,302 Issuance of shares for purchase of in process research and development expenses - related party 8,361,308 836 124,331,813 — 124,332,649 Net loss ( 130,249,204 ) ( 130,249,204 ) Balance, June 30, 2021 22,333,324 $ 2,232 $ 229,933,505 $ ( 224,885,422 ) $ 5,050,315 The accompanying notes are an integral part of the financial statements. F- 6 Table of Contents BioVie Inc. Statements of Cash Flows June 30, 2021 June 30, 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 130,249,204 ) $ ( 16,676,768 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of intangible assets 229,377 229,377 Common shares issued for service — 39,200 Common shares issued for interest payment — 13,487 Common shares issued for asset acquisition 124,332,649 Stock based compensation expense 3,019,809 24,846 Gain on extinguishment of loan payable ( 62,500 ) — Interest expense from convertible debenture 537,275 4,755,853 Change in fair value of derivative liabilities ( 8,279,919 ) 9,211,686 Changes in operating assets and liabilities: Other assets 282,298 ( 41,635 ) Accounts payable and accrued expenses ( 262,832 ) 815,726 Net cash used in operating activities ( 10,453,047 ) ( 1,628,228 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 15,628,010 — Proceeds from exercise of warrants 685,302 — Payment of convertible debenture - related party ( 1,821,818 ) — Proceeds from convertible debenture - related party 436,000 1,263,000 Proceeds from loan payable — 62,500 Net cash provided by financing activities 14,927,494 1,325,500 Net increase (decrease) in cash 4,474,447 ( 302,728 ) Cash, beginning of period 37,195 339,923 Cash, end of period $ 4,511,642 $ 37,195 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 22,180 $ 3,093 Cash paid for taxes $ — $ — SCHEDULE OF NON-CASH FINANCING ACTIVITIES: Deemed dividends - related party $ 53,598,320 $ 17,099,058 Stock warrants classified as derivative liability $ — $ 7,530,308 The accompanying notes are an integral part of the financial statements. F- 7 Table of Contents 1. Background Information BioVie Inc. (the “Company” or “we” or “our”) is a company developing innovative drug therapies to treat chronic debilitating conditions including liver disease and neurological and neuro-degenerative disorders and certain cancers. We are currently focused on developing and commercializing BIV201 (continuous infusion terlipressin), a novel investigational approach to the treatment of ascites due to chronic liver cirrhosis. Our therapy BIV201 is based on a drug that is approved in about 40 countries to treat related complications of liver cirrhosis (part of the same disease pathway as ascites), but not yet available in the United States. BIV201’s active agent is a potent vasoconstrictor and has shown efficacy for reducing portal hypertension in studies around the world. The goal is for BIV201 to interrupt the ascites disease pathway, thereby halting the cycle of accelerating fluid generation in ascites patients. BioVie completed a Phase 2a clinical trial of BIV201 in six patients with refractory ascites due to advanced liver cirrhosis at the McGuire Research Institute in Richmond, VA in 2019. The Company met with representatives of the Food and Drug Administration (“FDA”) in a Type C Guidance Meeting to discuss the study results and plan our next clinical study. Subsequently, we requested a Type B Meeting and submitted an extensive pre-meeting information package. In April 2020, the FDA provided a written response that provided new guidance regarding primary and secondary endpoints, BIV201 dosing levels, quality of life measures and other key aspects of the clinical trial design. After further communications, the Company completed the clinical trial design protocol and was cleared to begin a Phase 2 clinical study. We activated the first trial sites in the first calendar quarter of 2021 and as of July 2021, seven of nine planned US study centers have been activated and are actively screening patients, and two patients have been enrolled in the study. We plan to follow this study with a larger potentially pivotal Phase 3 clinical trial expected to begin in 2022. The Phase 2 study results will be used to guide the design of a potentially pivotal Phase 3 clinical trial. We have developed a patent-pending novel liquid formulation of BIV201 for use in this study that is intended to improve convenience for outpatient administration and avoid potential formulation errors that may occur when pharmacists reconstitute the powder version of terlipressin. BIV201 has the potential to improve the health of thousands of patients suffering from life-threatening complications of liver cirrhosis due to hepatitis, nonalcoholic steatohepatitis (NASH), and alcoholism. It has FDA Fast-Track status and Orphan Drug designation for the most common of these complications, ascites, which represents a significant unmet medical need. The first-approved orphan drug may receive 7 years of market exclusivity in the United States for the specific drug for the specific orphan indication. The FDA has never approved any drug specifically for treating ascites. In addition, the Company is applying for global patent coverage of a proprietary liquid formulation of terlipressin which could eventually provide up to 20 years of patent protection in countries where the Company seeks patent issuance according to local patent laws. The BIV201 development program began at LAT Pharma LLC. On April 11, 2016, the Company acquired LAT Pharma LLC and the rights to its BIV201 development program. The Company currently owns all development and marketing rights to its drug candidate. The Company and PharmaIN, Corp. (“PharmaIN”), LAT Pharma’s former partner focused on the development of new modified drug candidates in the same therapeutic field but not including BIV201, had agreed to pay royalties equal to less than 1% of future net sales of each company’s ascites drug development programs, or if such program is licensed to a third party, less than 5% of each company’s net license revenues. On December 24, 2018, the Company returned its partial ownership rights to the PharmaIN modified terlipressin development program and simultaneously paid the remaining balance due on a related debt. PharmaIN, Corp.’s rights to our program remain unchanged. On April 27, 2021, the Company entered into an Asset Purchase Agreement (the “APA”) with NeurMedix, Inc. (“NeurMedix”) and Acuitas Group Holdings, LLC (“Acuitas”), which are related party affiliates, pursuant to which the Company acquired certain assets from NeurMedix and assumed certain liabilities of NeurMedix, in exchange for the consideration of cash and shares of common stock. (collectively, the “Transaction”). The acquired assets include, among others, those related to certain drug candidates being developed by NeurMedix, including NE3107, a small molecule orally administered inhibitor of insulin resistance and the pathological inflammatory cascade, with a novel mechanism of action that has potential applications for treatment against Alzheimer’s Disease and Parkinson’s Disease. F- 8 Table of Contents The total cost of the asset purchase of the In Process Research and Development (“IPR&D”) was approximately $ 130.6 million. The Company issued 8,361,308 shares of the Company’s common stock, valued at $ 14.87 per share, the closing price on June 10, 2021 (the closing date); and was required to make cash payments totaling approximately $6.3 million, of which approximately $2.3 million was paid to Acuitas and approximately $ 4.0 million to others for due diligence, legal fees, transaction fees and the fairness opinion. Subject to the terms and conditions of Amendment No. 1 to the APA dated May 9, 2021, (the “Amendment” and the APA as so amended, the “Asset Purchase Agreement”); following the closing, the Company may be obligated to deliver contingent stock consideration to NeurMedix (or its successor) consisting of up to 18.0 million shares of BioVie’s common stock, with 4.5 million shares issuable upon the achievement of each of the four milestones set forth in the Asset Purchase Agreement, subject to a cap limiting the issuance of shares if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 87.5% of BioVie’s issued and outstanding common. (See Note 5 Related Party Transactions - Equity Transactions with Acuitas ) 2. Liquidity and Going Concern The Company’s operations are subject to a number of factors that can affect its operating results and financial conditions. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s products, the Company’s ability to obtain regulatory approval to market its products, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company’s ability to raise capital. The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2021, the Company had working capital of approximately $ 3.6 million, cash of approximately $4.5 million, stockholders’ equity of approximately $5.1 million, and an accumulated deficit of approximately $224.9 million. In addition, the Company has not generated any revenues to date and no revenues are expected in the foreseeable future. The Company’s future operations are dependent on the success of the Company’s ongoing development and commercialization effort, as well as continuing to secure additional financing. The cash payments required to close on the purchase of the biopharmaceutical assets from NeurMedix had a significant impact on the Company’s cash position. On August 11, 2021, the Company closed a capital raise issuing 2.5 million shares of commons stock at $8.00 per share and increased cash by the net proceeds of approximately $17.8 million. Although the increase in the cash balance could possibly sustain operations over the next 12 months if measures are taken to delay planned expenditures in our research protocols and slow the progress in the Company’s clinical programs, the Company’s current planned operations to meet certain goals and objectives, project cash flows to be depleted within that period of time. The future viability of the Company is largely dependent upon its ability to raise additional capital to finance its operations. Management expects that future sources of funding may include sales of equity, obtaining loans, or other strategic transactions. The emergence of widespread health emergencies or pandemics such as coronavirus (“COVID-19”) and its variants, may lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability, including the duration and spread of the outbreak and restrictions and the impact of COVID-19 and its variants on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s ability to raise funds may be materially adversely affected. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company, if at all, to fund continuing operations. These circumstances raise substantial doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. F- 9 Table of Contents 3. Significant Accounting Policies Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheet and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, accounting for share-based compensation, accounting for derivatives and accounting for income taxes. Actual results could differ from those estimates. Cash The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. Cash is maintained at two financial institutions, and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. Other Assets Other assets consist of direct costs related to capital raise and filing of the registration statement legal fees and investment banking fees incurred to raise capital. The costs will be offset against proceeds received once the Company raises the capital. Fair Value of Financial Instruments Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value for applicable assets and liabilities, we consider the principal or most advantageous market in which we would transact and we consider assumptions market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than 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, which require the reporting entity to develop its own assumptions The Company’s financial instruments include cash, accounts payable, related party loans and a demand promissory note. The carrying amounts of cash and accounts payable approximate their fair value, due to the short-term nature of these items. Loan Pursuant to Paycheck Protection Program The Company received $ 62,500 in loan proceeds pursuant to the Paycheck Protection Program (“PPP”), under the Coronavirus Aid Relief and Economic Security (CARES) Act. The PPP Loan is evidenced by a loan application and payment agreement by and between the Company and Lender. The Company applied for the loan in May 2020 and received funding for its maximum amount of $62,500 on May 21, 2020. The term of the loan is for 60 months and matures on the fifth-year anniversary from the date of funding. It bears interest at an annual rate of 1%. On June 28, 2021, the Company received confirmation that the Small Business Administration’s PPP loan was forgiven and recognized the loan forgiveness as gain on extinguishment of debt in the accompanying Statements of Operations. F- 10 Table of Contents Research and Development Research and development expenses consist primarily of costs associated with the preclinical and/ or clinical trials of drug candidates, compensation and other expenses for research and development, personnel, supplies and development materials, costs for consultants and related contract research and facility costs. Expenditures relating to research and development are expensed as incurred. In the fiscal year ended June 30, 2021 the company recorded the assets acquired totaling approximately $130.6 million from NeurMedix, a controlled affiliate of Acuitas, our majority shareholder, that were under development as research and development expenses in the accompanying Statements of Operations. See Note 1 - Background Information. Income Taxes The Company uses the asset and liability method of accounting for deferred income taxes. Deferred income taxes are measured by applying enacted statutory rates to net operating loss carryforwards and to the differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognizes uncertainty in income taxes in the financial statements using a recognition threshold and measurement attribute of a tax position taken or expected to be taken in a tax return. The Company applies the “more-likely-than-not” recognition threshold to all tax positions, commencing at the adoption date of the applicable accounting guidance, which resulted in no unrecognized tax benefits as of such date. Additionally, there have been no unrecognized tax benefits subsequent to adoption. The Company has opted to classify interest and penalties that would accrue, if any, according to the provisions of relevant tax law as general and administrative expenses, in the Statements of Operations. For the years ended June 30, 2021 and 2020, there was no such interest or penalty. Net Loss per Common Share Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants, and convertible debentures. For the years ended June 30, 2021 and 2020, such amounts were excluded from the diluted loss since their effect was considered anti-dilutive due to the net loss for the year. The table below shows the number of outstanding stock options and warrants as of June 30, 2021 and June 30, 2020: Schedule of Dilutive securities were excluded from the computation of diluted loss per share June 30, 2021 June 30, 2020 Number of Shares Number of Shares Stock Options 755,200 60,400 Warrants 158,761 1,374,667 Total 913,961 1,435,067 F- 11 Table of Contents Stock-based Compensation The Company has accounted for stock-based compensation under the provisions of FASB ASC 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). For employee awards, the fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the fair value of each stock option award is estimated on the measurement date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the Company utilizes the graded vesting attribution method under which the entity treats each separately vesting portion (tranche) as a separate award and recognizes compensation cost for each tranche over its separate vesting schedule. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company recognizes forfeitures as they occur. Goodwill Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net identified tangible and intangible assets acquired. The Company performs an annual impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests. The Company’s impairment review process compares the fair value of the reporting unit to its carrying value, including the goodwill related to the reporting unit. To determine the fair value of the reporting unit, the Company may use various approaches including an asset or cost approach, market approach or income approach or any combination thereof. These approaches may require the Company to make certain estimates and assumptions including future cash flows, revenue and expenses. These estimates and assumptions are reviewed each time the Company tests goodwill for impairment and are typically developed as part of the Company’s routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable, variations from those estimates could produce materially different results. The Company did not recognize any goodwill impairments for the years ended June 30, 2021 and 2020. Impairment of Long-Lived Assets Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment review is performed. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Generally, fair value is determined using valuation techniques such as expected discounted cash flows or appraisals, as appropriate. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated or amortized. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheets. Purchase Accounting for Transactions with Related Party Purchase accounting for transactions with related party, entities under common control, are recorded at the historical carrying cost with no step up in basis to the fair market value of the asset or liability are recognized. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASU’s”). There were no recent ASU’s that are expected to have a material impact on our balance sheets or statements of operations. F- 12 Table of Contents 4. Intangible Assets The Company’s intangible assets consist of intellectual property acquired from LAT Pharma, Inc. and are amortized over their estimated useful lives. The following is a summary of the intangible assets as of June 30, 2021 and 2020: June 30, 2021 June 30, 2020 Intellectual Property $ 2,293,770 $ 2,293,770 Less Accumulated Amortization ( 1,197,921 ) ( 968,544 ) Intellectual Property, Net $ 1,095,849 $ 1,325,226 Amortization expense amounted to $229,377 for each of the years ended June 30, 2021 and 2020, respectively. The Company amortizes intellectual property over the expected original useful lives of 10 years. Estimated future amortization expense is as follows: Schedule of Future expected Amortization of intangible assets Year ending June 30, 2022 229,377 2023 229,377 2024 229,377 2025 229,377 2026 178,341 Intellectual Property, Net $ 1,095,849 5. Related Party Transactions Asset Acquisition with NeurMedix On April 27, 2021, the Company entered into an APA with NeurMedix and Acuitas, which are related party affiliates, pursuant to which the Company acquired certain assets from NeurMedix and assumed certain liabilities of NeurMedix, in exchange for consideration of cash and shares of common stock. The acquired assets include, among others, those related to certain drug candidates being developed by NeurMedix, including NE3107, a small molecule orally administered inhibitor of insulin resistance and the pathological inflammatory cascade, with a novel mechanism of action that has potential applications for treatment against Alzheimer’s Disease and Parkinson’s Disease. Subject to the terms and conditions of the Asset Purchase Agreement, following the closing, the Company may be obligated to deliver contingent stock consideration to NeurMedix (or its successor). Previously, the Company was obligated to deliver contingent stock consideration to NeurMedix (or its successor) consisting of shares of the Company’s common stock having an aggregate value of up to $3.0 billion, subject to the achievement of certain clinical, regulatory and commercial milestones related to the drug candidates to be acquired by the Company from NeurMedix, and subject to a cap limiting each issuance of shares if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 89.9999% of the Company’s issued and outstanding common stock. Pursuant to the Amendment No. 1 to the APA, dated May 9, 2021, the Company may now be obligated to deliver contingent stock consideration to NeurMedix (or its successor) consisting of up to 18 million shares of BioVie’s common stock, with 4.5 million shares issuable upon the achievement of each of the four milestones set forth in the APA, subject to a cap limiting the issuance of shares if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 87.5% of the Company’s issued and outstanding common stock. F- 13 Table of Contents On June 10, 2021, and pursuant to the Asset Purchase Agreement, the Company issued to Acuitas (as NeurMedix’s assignee) 8,361,308 shares of the Company’s common stock and made a cash payment of approximately $2.3 million, representing NeurMedix’s direct and documented cash expenditures to advance certain programs from March 1, 2021 through the closing date and cash payments to other third parties for expenses totaling approximately $4.0 million for due diligence, legal fees, transaction fees and the fairness opinion. Since the transaction was between entities under common control, there were no fair value adjustments of the purchased assets and the historical cost basis of the purchased assets was zero . The total consideration paid was expensed as research and development expense. Equity Transactions with Acuitas On September 22, 2020, concurrent with the closing of the Company’s Offering, approximately $1.8 million was paid to Acuitas satisfying all amounts owed on the Debenture due September 24, 2020 held by the Company’s controlling stockholder, Acuitas. Additionally, in connection with the close of the public offering on September 22, 2020, the Company issued an aggregate of 6,909,582 shares of Common Stock to Acuitas, representing (i) 5.4 million shares issuable pursuant to Acuitas’ rights under the Purchase Agreement dated July 3, 2018, as amended on June 24, 2019 and October 9, 2019; and the various extension letters as more fully described below; which resulted in a deemed dividend at the close of the public offering at price of $10 per share, consistent with the Company’s accounting policy; and (ii) the automatic exercise of 1.5 million warrants issued to Acuitas in connection with the Debenture financing at the par value of the Common Stock. During the year ended June 30, 2021, the Company received additional draws under the Debenture totaling $436,000. The total draws as of September 22, 2020 were $1.7 million and the related total number of warrants issuable at $4.00 per share of common stock was 424,750 of which 328,250 warrants had been issued. In accordance with the Debenture agreements, as more fully described below; at September 22, 2020 upon the Company’s close of its public offering, all the warrants issued related to the debenture totaling 1,453,250 were mandatorily redeemed along with the additional 96,500 shares common stock issued to Acuitas. The following paragraphs summarize the background of those financings and arrangements which were settled and redeemed on September 22, 2020. On July 3, 2018, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Acuitas and certain other purchasers identified in the Purchase Agreement (together with Acuitas, the “Purchasers”) pursuant to which (i) the Purchasers agreed to purchase an aggregate of 2,133,332 shares of the our Series A Convertible Preferred Stock (the “Preferred Stock”) at a price per share of $1.50 per share of Preferred Stock (the “Initial Sale”) and (ii) we agreed to issue warrants (the “Warrants”) to purchase 1,706,666 shares of common stock, each subject to the terms and conditions set forth in the Purchase Agreement, for an aggregate consideration of $3.2 million. We received $160,000 of the $3.2 million in April and May 2018 as prepaid equity. Acuitas also received an additional 6,667 Warrants in connection with the payoff of a note issued by us in favor of Acuitas. The Initial Sale and issuance of the Warrants occurred on July 3, 2018. In addition, Acuitas had the option to purchase up to an additional 1,600,000 shares of common stock at a price per share of $1.88, and warrants on the same terms as the Warrants, within two weeks following the one year anniversary of the closing of the Initial Sale (the “Subsequent Sale”) in the event that we did not obtain $3,000,000 of funding through various non-dilutive grants prior to the one year anniversary of the closing of the Initial Sale, less any federal or FDA grant funding received by the Company. Acuitas is controlled by our Chairman and Chief Executive Officer, Terren Peizer and the Purchasers included Jonathan Adams, James Lang, Cuong Do and Michael Sherman, who are members of our Board. F- 14 Table of Contents The Purchase Agreement contained customary representations and warranties. In connection with the disclosure schedule associated with the representations and warranties, we also disclosed customary information, including the following: (i) the existence of the Mallinckrodt petition before the U.S. Patent Trial and Appeal Board, (ii) our capitalization, (iii) our obligation to pay a low single digit royalty on the net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma LLC members, PharmaIN Corporation and The Barrett Edge, Inc. pursuant to the Agreement and Plan of Merger, dated April 11, 2016, by and between LAT Pharma LLC and us, (iv) our obligation to pay a low single digit royalty on net sales of all terlipressin products covered by specified patents up to a maximum of $200,000 per year pursuant to the Technology Transfer Agreement, dated July 25, 2016, by and between us and the University of Padova (Italy), and (v) certain recent issuances of common stock by us. Each share of Preferred Stock automatically converted into 1 share of common stock upon the filing with the Secretary of State of the State of Nevada of a Certificate of Amendment to our Articles of Incorporation (the “Amendment”) on August 13, 2018 that increased the number of authorized shares of common stock to 800,000,000. The Amendment was approved by the written consent of the holders of more than a majority of our issued and outstanding common stock on July 3, 2018 and was filed with the Secretary of State of the State of Nevada 20 calendar days following the distribution of our Definitive Information Statement on Schedule 14 that was filed with the SEC on July 13, 2018. Pursuant to a letter agreement dated June 24, 2019, Acuitas agreed to modify its existing rights under the Purchase Agreement so that: - Acuitas agreed to immediately exchange its existing 1,606,667 Warrants for common stock such that it will have effectively exercised its Warrants in full pursuant to a cashless exercise thereof at an assumed current market price of $45.00 per share and, as a result received an aggregate of 95% of the shares covered thereby, or 1,526,094 shares of common stock; - Acuitas agreed to (i) waive its rights to a 50% adjustment of the purchase price of the Preferred Stock in the Initial Sale, the exercise price of the Warrants and the price per share in the Subsequent Sale in the event of certain reductions in the useful life of our current intellectual property rights, and (ii) effectively exercise its rights to purchase securities in a Subsequent Sale pursuant to a “cashless purchase” at an assumed current market price of approximately $11.25 per share, conditioned in each case on the listing of our common stock on Nasdaq or the raising of $2.0 million in additional funds in the form of another securities offering, in either case not later than November 30, 2019, which will result Acuitas having irrevocably waived its rights to an adjustment in the purchase price of the Preferred Stock in the Initial Sale and the exercise price of the Warrants and the purchase price of per share in the Subsequent Sale upon the issuance by us of an aggregate of 1,339,958 shares of common stock (the “Subsequent Sale Shares”) to Acuitas, which is expected to occur concurrently with the closing of our potential public offering and listing on Nasdaq; - Acuitas shall in exchange for the foregoing agreements and waivers have the option to purchase additional shares of common stock and warrants to purchase one share of common stock for each share of common stock purchased during the period from September 1, 2019 to November 30, 2019 at the then-effective purchase price of the Preferred Stock in the Initial Sale (the “Funding Option”), provided that any shares issued pursuant to any exercise of the Funding Option will reduce share-for-share the amount of shares issued pursuant to the deemed exercise of its rights to purchase securities in a Subsequent Sale mentioned above. Convertible Debenture Transaction with Acuitas On September 24, 2019, the Company entered into a Securities Purchase Agreement (the “2019 Purchase Agreement”) with Acuitas pursuant to which (i) Acuitas agreed to purchase a 10% OID Convertible Delayed Draw Debenture due September 24, 2020 for an aggregate commitment amount of up to $2.0 million, and (ii) the Company issued 1,125,000 shares (the “Commitment Shares”) of the Company’s common stock and warrants (the “Commitment Warrants”) to purchase an equal number of shares, each subject to the terms and conditions set forth in the 2019 Purchase Agreement. The Debenture accrues additional principal at the rate of 6% per annum and interest at the rate of 10% per annum, is convertible into shares of common stock at $4.00 per share prior to the completion of the company’s planned public offering of units (the “Public Offering”) or, subsequent to the closing of the Public Offering, the lower of $4.00 or 80% of the offering price per unit to the public in the Public Offering and are mandatorily redeemable upon such closing at 100% of the accrued principal amount and unpaid interest to the date of redemption. The Commitment Warrants are five-year warrants, exercisable upon the earlier of the effectiveness of the Company’s current reverse stock split or December 1, 2019, at an amount equal to the lower of $4.00 or 80% of the offering price per unit to the public in the Public Offering. Upon entering into the 2019 Purchase Agreement, the Company drew an initial $500,000 under the Debenture and in accordance with the 2019 Purchase Agreement, Acuitas received an additional 125,000 warrants (the “Bridge Warrants”) having the same terms as the Commitment Warrants. F- 15 Table of Contents Any future draws under the Debenture, which may be made from and after October 15, 2019, November 15, 2019 and December 15, 2019 in equal tranches of $500,000 each, will entitle Acuitas to receive additional Bridge Warrants in equal amount upon such funding. In addition, the 2019 Purchase Agreement provides that, should the underwriters in the Public Offering exercise their option to purchase additional securities during the 45 days following closing and the issuance of such securities would result in Acuitas’ beneficial ownership (on a fully diluted basis) of shares of common stock being below 60%, Acuitas shall be issued a number of additional shares of common stock and warrants having the same terms as the Commitment Warrants to result in its beneficial ownership (on a fully diluted basis) of shares of common stock equaling 60%. The issuance of 1,125,000 shares of the Company’s commons stock and warrants to purchase an equal amount number of shares, to its controlling stockholder for the Bridge Financing was accounted for as a deemed dividend due to its related party nature and $17.1 million representing the excess of the fair value of the consideration given for the financing, net of debt discount; was recorded in accumulated deficit for the year ended June 30, 2020, accordingly. A debt discount of $500,000 against the debenture was recorded which will be amortized over the term of the debenture using the effective interest method. The Company received draws under the Debenture that totaled approximately $1.3 million during the year ended June 30, 2020. The total interest expense related to the draws under the Debenture was approximately $99,000 for the year ended June 30, 2020. On April 1, 2020, the Company entered an amendment to modify the payment of accrued interest amounts under the original terms of the Debenture to capitalize all such amounts as would otherwise accrue on the Debenture. On January 4, 2020, payment of $13,487 accrued interest due was paid through the issuance of 4,422 shares of the Company’s common stock. Acuitas and the Company continue to discuss the need and timing for some or all the remaining draws under the Debenture Agreement. Subsequent to the initial $500,000 draw on September 24, 2019, the Company received draws that totaled $813,000 as July 13, 2020, and accordingly; the Company issued additional Bridge Warrants to purchase 203,250 shares of common stock to its controlling stockholder under the terms of the Bridge Financing. Accordingly, on April 16, 2020, the Company recorded the warrants to purchase 125,000 common stock related to the second $500,000 draw under the debenture as a derivative warrant liability as of June 30, 2020. The Company recorded the warrants related to the draws totaling $313,000 to purchase 78,250 common shares as derivative liabilities. Pursuant to the 2019 Purchase Agreement, Acuitas has agreed to further modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that Acuitas’ previous agreement in June 2019 to waive its rights to a 50% adjustment of the purchase price of the Preferred Stock in the July 2018 transaction, the exercise price of the warrants in such transaction and the price per share in a Subsequent Sale in the event of certain reductions in the useful life of our current intellectual property rights, and effectively exercise its rights to purchase securities in a Subsequent Sale pursuant to a “cashless purchase” at an assumed current market price of approximately $11.25 per share, conditioned in each case on the listing of the Company’s common stock on Nasdaq or the raising of $2.0 million in additional funds in the form of another securities offering, in either case not later than November 30, 2019, such that Acuitas will have irrevocably waived its rights to an adjustment in the purchase price of the Preferred Stock in the Initial Sale and the exercise price of the Warrants and the purchase price of per share in the Subsequent Sale upon the issuance by us of an aggregate of 2,679,916 shares of common stock and 2,679,916 warrants having the same terms as the Commitment Warrants to Acuitas, upon the closing of the Public Offering. Pursuant to an amendment to the 2019 Purchase Agreement dated October 9, 2019, Acuitas agreed to modify its existing rights under the 2019 Purchase Agreement so that: - The Commitment Warrants (and related warrants issued upon the first draw under the Debenture) were replaced with warrants having similar terms, but which are automatically exercised upon the closing of the offering at an exercise price equal to the par value of the common stock; F- 16 Table of Contents - Acuitas’ existing rights under the Purchase Agreement dated July 3, 2018 with the Company were further amended so that the number of Subsequent Sale Shares would be multiplied by four (in lieu of the changes to the Purchase Agreement originally provided for in the 2019 Purchase Agreement); and - The provisions of the 2019 Purchase Agreement providing that, should the underwriters in the offering exercise their option to purchase additional securities during the 45 days following closing and the issuance of such securities would result in Acuitas’ beneficial ownership (on a fully diluted basis) of shares of common stock being below 60%, Acuitas will be issued a number of additional shares of common stock and warrants having the same terms as the Commitment Warrants to result in its beneficial ownership (on a fully diluted basis) of shares of common stock equaling 60% have been modified such that, upon the exercise of such option by the underwriters, the Company will issue to Acuitas a number of securities that will result in Acuitas’ fully diluted beneficial ownership after the exercise of such option being the same as prior thereto. On July 14, 2020, the Company, entered into a further extension of its letter agreements dated April 8, 2020, that furthered extended its letter agreement dated February 10, 2020 with Acuitas regarding Acuitas’ previous agreement to modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that its June 2019 waiver of its rights to a 50% adjustment of the purchase price applicable to its initial investment in the Company and the exercise price of the warrants received in such transaction and the price per share should it exercise certain rights to purchase additional securities in the event of certain reductions in the useful life of the Company’s intellectual property rights and commitment to purchase such securities upon the closing of the Company’s planned public offering of shares of Class A common stock (the “Common Stock”) as described in its Registration Statement on Form S-1 (File No. 333-231136) and commitment to purchase such additional securities would remain effective until October 31, 2020, and accordingly Acuitas shall be entitled to receive an aggregate of 5,359,832 shares of Common Stock at such closing. In addition, the parties agreed that certain draws under the Company’s current bridge financing with Acuitas were to be made based with respect to the Company’s ongoing capital requirements and current market conditions, notwithstanding certain scheduled availability dates set forth in the 10% OID Convertible Delayed Draw Debenture issued in connection therewith. The letter agreement of July 14, 2020 also confirmed the understanding between the Company and Acuitas regarding certain amounts funded to BioVie that were intended as “partial draws” of credit available under the Debenture which, as of the date hereof aggregated $813,000 in aggregate principal amount in additional to amounts initial funded under the Debenture. Accordingly, such “partial draws” shall accrue additional principal as amounts otherwise funded pursuant to the original schedule of draws included in the Debenture (as modified by the letter agreement between BioVie and Acuitas dated April 1, 2020 regarding the capitalization of interest otherwise payable) and shall entitle Acuitas to receive a pro rata amount of Bridge Warrants. 6. Fair Value Measurements On September 22, 2020, concurrent with the closing of the Offering; the warrants related to derivative liabilities were automatically exercised in full and the convertible Debenture was paid off in cash expiring the conversion option. The fair value of the derivative liabilities – warrants and derivative liability – conversion option on convertible Debenture prior to redemption at September 22, 2020 was $13.1 million, and the change in the fair value of $8.3 million from June 30, 2020 was recorded in the accompanying Statements of Operations. At September 22, 2020, the derivative liabilities, both the warrants and expired conversion option totaling $ 13.1 million were then recorded as additional paid in capital upon automatic exercise of the warrants and payoff of the Debenture. F- 17 Table of Contents At June 30, 2021 and 2020, the estimated fair value of derivative liabilities measured on a recurring basis are as follows: Fair Value Measurements at June 30, 2021 Level 1 Level 2 Level 3 Total Derivative liability – Warrants $ — $ — $ — $ — Derivative liability -Conversion option on convertible debenture — — — — Total derivatives $ — $ — $ — $ — Fair Value Measurements at June 30, 2020 Level 1 Level 2 Level 3 Total Derivative liability – Warrants $ — $ — $ 16,411,504 $ 16,411,504 Derivative liability -Conversion option on convertible debenture — — 5,000,800 5,000,800 Total derivatives $ — $ — $ 21,412,304 $ 21,412,304 The following table presents the activity for liabilities measured at fair value using unobservable inputs for the year ended June 30, 2021 and 2020: Derivative liabilities – Warrants Derivative liability – Conversion Option on Convertible Debenture Balance at July 1, 2019 $ — $ — Additions to level 3 liabilities 9,561,652 2,638,966 Change in in fair value of level 3 liability 6,849,852 2,361,834 Transfer in and/or out of Level 3 — — Balance at July 1, 2020 $ 16,411,504 $ 5,000,800 Additions to level 3 liabilities — — Change in in fair value of level 3 liability ( 6,054,121 ) ( 2,225,798 ) Transfer in and/or out of Level 3 ( 10,357,383 ) ( 2,775,002 ) Balance at June 30, 2021 $ — $ — Derivative liability – Warrants The Company accounts for stock purchase warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreements. Under applicable accounting guidance, stock warrants that are precluded from being indexed to the Company’s own stock because of full-rachet anti-dilution provisions or the adjustments to the strike price due to an occurrence of a future event; are accounted for as derivative financial instruments. The stock warrants issued September 24, 2019 were not considered indexed to the Company’s own stock because of the adjustment to strike price, an occurrence of a future event such as the Company’s pending capital raise. F- 18 Table of Contents The warrants associated with the level 3 liability were issued on September 24, 2019 and were valued using the Black-Scholes-Merton model. The valuation at June 30, 2020 used the following assumptions: stock price of $ 14 , exercise price of $ 4.00 , term of 5 year expiring April 2025, volatility of 76.61 % , dividend yield of 0 % , and risk-free interest rate of 0.29 % . The valuation at September 22, 2020 of the warrants associated with equity financing prior to their automatic exercise in full used were the following assumptions: stock price of $ 9.55 , exercise price of $ 4.00 , term of 4 year expiring September 2024, volatility of 79.69 % , dividend yield of 0 % , and risk-free interest rate of 0.21 % . (See note 5 “Related Party Transactions”) Derivative liability – Conversion option in convertible debenture The Company recognized a derivative liability for the conversion option of the $2 million 10% OID Convertible Delayed Draw Debenture; which may be convertible into shares of common stock at $4.00 per share prior to the completion of an offering or, subsequent to the closing of the offering, the lower of $4.00 or 80% of the offering price per unit to the public in such offering and are mandatorily redeemable upon such closing at 100% of the accrued principal amount and unpaid interest to the date of redemption. The valuation at June 30, 2020 used the following assumptions: stock price of $ 14 , conversion price of $ 4.00 , term of 0.25 year expiring September 2020, volatility of 62.47 % , dividend yield of 0 % , and risk-free interest rate of 0.16 % . The valuation at September 22, 2020 used the following assumptions: stock price of $ 9.55 , conversion price of $ 4.00 , term of 0.008 year expiring September 2020, volatility of 45.49 % , dividend yield of 0 % , and risk-free interest rate of 0.01 % . The related Debenture was paid off in cash on September 22, 2020, expiring the conversion option. (See note 5 “Related Party Transactions”) 7. Equity Transactions Stock Options The following table summarizes the activity relating to the Company’s stock options for the years ended June 30, 2021 and 2020: Options Weighed- Average Exercise Price Weighted Remaining Average Contractual Term Aggregate Intrinsic Value Outstanding at June 30, 2019 58,000 $ 12.50 5.2 $ 273,000 Granted 10,400 3.88 4.5 105,200 Options Exercised or Forfeited ( 8,000 ) — — — Outstanding at June 30, 2020 60,400 11.06 4.2 352,600 Granted 698,000 15.03 4.5 2,114,032 Options Exercised or Forfeited ( 3,200 ) 4.76 — — Outstanding at June 30, 2021 755,200 $ 4.34 4.4 $ 2,569,232 Exercisable at June 30, 2021 236,500 $ 13.85 4.2 $ 992,384 F- 19 Table of Contents The fair value of each option grant on the date of grant is estimated using the Black-Scholes Option – Pricing model reflecting the following weighted-average assumptions : June 30, 2021 June 30, 2020 Expected life of options (In years) 5 5 Expected volatility 77.29 % 73.74 % Risk free interest rate 0.39 % 1.63 % Dividend Yield 0 % 0 % Expected volatility is based on the historical volatilities of three comparable companies of the daily closing price of their respective common stock and the expected life of options is based on historical data with respect to employee exercise periods. The Company accounts for forfeitures as they are incurred. The Company recorded stock-based compensation expense of approximately $3.0 million and $24,800 for the years ended June 30, 2021 and 2020, respectively. As of June 30, 2021, unrecognized stock-based compensation cost was $ 3.0 million which is expected to be recognized over a weighted-average period of approximately 2.5 years. The following is a summary of stock options outstanding and exercisable by exercise price as of June 30, 2021: Exercise Price Outstanding Weighted Average Contract Life Exercisable $ 2.80 7,200 3.6 7,200 $ 3.75 4,800 2.6 4,800 $ 6.25 1,600 2.3 1,600 $ 7.50 25,600 4.6 25,600 $ 8.75 1,600 2.8 1,600 $ 9.54 800 4.3 800 $ 9.90 800 4.3 800 $ 12.50 4,000 1.6 4,000 $ 13.91 691,600 4.5 172,900 $ 25.00 1,600 1.3 1,600 $ 26.25 4,400 0.8 4,400 $ 27.50 800 0.1 800 $ 28.75 1,600 1.1 1,600 $ 31.25 4,000 0.4 4,000 $ 42.09 4,800 4.6 4,800 755,200 236,500 F- 20 Table of Contents Stock Warrants The following table summarizes the warrants activity during the years ended June 30, 2021 and 2020: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value Outstanding and exercisable at June 30, 2019 124,667 $ 45.00 5.6 $ 1,202,678 Granted 1,250,000 $ 4.00 4.7 $ — Expired — $ — — $ — Exercised — $ — — $ — Outstanding and exercisable at June 30, 2020 1,374,667 $ 7.72 4.2 $ 13,799,331 Granted 293,248 $ 6.61 4.8 $ — Exercised ( 55,904 ) $ 12.29 4.0 $ — Exercised - Acuitas ( 1,453,250 ) $ 4.00 4.0 $ — Outstanding and exercisable at June 30, 2021 158,761 $ 10.37 3.1 $ 1,765,437 Of the above warrants, 9,391 expire in fiscal year ending June 30, 2022, 4,815 expire in fiscal year ending June 30, 2023, 2,714 expire in fiscal year ending June 30, 2025 and 141,841 expire in fiscal year ending June 30, 2026. Issuance of common stock through exercise of Stock Options and Warrants On July 28, 2020, the Company issued 2,210 shares of common stock pursuant to a cashless exercise of stock options to purchase 3,200 shares at an average exercise price of $ 4.76 per share. On January 27, 2021, the Company issued 304 shares of common stock pursuant to a cashless exercise of warrants to purchase 320 shares at an average exercise price of $ 1.88 per share. On March 23, 2021, the Company issued 27,000 shares of common stock pursuant to a cash exercise of warrants to purchase 27,000 shares at an average exercise price of $ 12.50 per share. On March 24, 2021, the Company issued 14,324 shares of common stock pursuant to a cash exercise of warrants to purchase 14,324 shares at an average exercise price of $ 12.50 per share. On April 19, 2021, the Company issued 724 shares of common stock pursuant to a cashless exercise of warrants to purchase 760 shares at an average exercise price of $ 1.88 per share. On April 30, 2021, the Company issued 13,500 shares of common stock pursuant a cash exercise of warrants at $ 12.50 per share. Issuance of Shares for Services On January 2, 2020, the Company issued 11,200 shares of common stock to the members of the board of directors as part of the annual directors’ compensation. The share price on date of issuance was $3.50. On January 2, 2020, the Company paid accrued interest on the Debenture of $ 13,487 to Acuitas through the issuance of 4,422 shares of common stock. F- 21 Table of Contents Issuance of Stock Options On November 10, 2019, the Company granted stock options to purchase 800 shares of common stock to an executive clinical team member as part of her compensation. The exercise price of the stock options is $ 6.25 , are exercisable at any time and expire in 5 years from the date of issuance. On January 19, 2020, the Company granted stock options to purchase 8,000 shares of common stock to the members of the board of directors as part of their annual director compensation. The exercise price of the stock options are $ 2.80 , are exercisable at any time and expire in 5 years from the date of issuance. On June 26, 2020, the Company issued 5,046 shares of common stock pursuant to a cashless exercise of stock options to purchase 8,000 shares at an exercise price of $6.25 per share. On October 1, 2020 and 2019, the Company granted stock options to purchase 800 shares of common stock at each grant date to the Chief Financial Officer as part of her compensation. The exercise prices of the stock options are $ 9.54 for the 2020 grant and $ 8.75 for the 2019 grant; are exercisable at any time and expire in 5 years from the date of issuance. On October 13, 2020 and 2019, the Company granted stock options to purchase 800 shares of common stock, at each grant date; to a director as part of his annual director’s compensation. The exercise price of the stock options is $ 9.90 for the 2020 grant and $ 7.50 for the 2019 grant; are exercisable at any time and expire in 5 years from the date of grant. On December 18, 2020, the Company granted stock options under the Company’s 2019 Omnibus Incentive Compensation Plan to purchase 691,600 shares of common stock to the members of the board as part of their annual compensation. The first 25% of the stock options vest on the grant date, and the remaining 75% vest over a 3-year period, on the first, second, and third anniversary of the grant date. The stock options were issued at an exercise price of $ 13.91 per share and expire 5 years from the date of grant. On January 19, 2021, the Company granted stock option to purchase a total of 4,800 shares of common stock, granting 800 shares each to then Chief Operations Officer, an executive clinical team member and to four of its key consultants as part of their annual compensation. The exercise price of the options is $ 42.09 per share, are exercisable at any time and expire 5 years from the date of issuance. Issuance of warrants On July 13, 2020, the Company issued Warrants to purchase 203,250 shares of common stock to its controlling stockholder under the terms of the Bridge Financing. The warrants were exercisable at an exercise price of $ 4 at any time from the date of issuance until 5 years from the date of issuance. (See Note 5 Related Party Transactions.) On September 22, 2020, the Company issued warrants to purchase 89,998 shares of common stock to the underwriters of the Offering in connection with the close of the Offering of registered Common Stock The warrants are exercisable at an exercise price of $ 12.50 at any time from date of issuance until 5 years from the date of issuance. 8. Commitments and Contingencies Office Lease On July 1, 2019, the Company’s office moved with Acuitas’ new offices to 2120 Colorado Avenue Ste 230, Santa Monica, CA 90404. There is no lease agreement for the new premises and the Company continues to accrue monthly lease payments of $1,000 for the new office under the terms of the previous month-to-month lease for the previous premises which may be cancelled upon 30 days’ written notice. On July 1, 2021, the Company assumed NeurMedix lease at 6165 Greewich Dr Suite 150, San Diego, CA 92122. The lease agreement requires monthly payments of $8,782. F- 22 Table of Contents Challenge to US Patent On April 30, 2018, we received notice that Mallinckrodt had petitioned the U.S. Patent and Trademark Office (“USPTO”) to institute an Inter Partes Review of our U.S. Patent No. 9,655,945 titled “Treatment of Ascites” (the “’945 patent”). Inter Partes Review is a trial proceeding conducted with the USPTO Patent Trial and Appeal Board (PTAB) to review the patentability of one or more claims of a patent. Such review is limited to grounds of novelty and obviousness on the basis of prior art consisting of patents and printed publications. On November 13, 2019, the Patent Trial and Appeal Board of the United States Patent and Trademark Office (the “Board”) issued a written decision in the inter partes review (“IPR”) action that was brought by Mallinckrodt Pharmaceuticals Ireland Limited (“Mallinckrodt”) against BioVie Inc. (“BioVie” or “Company”). In that action, Mallinckrodt sought to invalidate BioVie’s patent (U.S. Pat. No. 9,655,945, “Treatment of Ascites”) (the “’945 Patent”). In its decision, the Board determined that all claims of the ’945 Patent were not patentable because they were either anticipated or obvious in light of prior art. The Board also denied BioVie’s Motion to Amend the claims on similar grounds. The result of the Board’s decision is that the ’945 patent is no longer valid or enforceable. Acuitas Group Holdings, LLC was aware of this patent challenge when it purchased a majority ownership interest in the Company in July 2018. This ruling is unrelated to the Company’s Orphan drug designations for ascites and hepatorenal syndrome (“HRS”), which remain unchanged. An Orphan drug that is first-to-market typically receives 7 years of market exclusivity in the United States for the designated use(s). In addition, the ruling does not affect the Company’s rights in its pending patent application directed to proprietary liquid formulations of terlipressin for use in its planned Phase 2 and Phase 3 trials, subject to FDA clearance, which could eventually provide up to 20 years of patent coverage in each country in which the Company seeks patent protection, such as the United States, if a patent issues from a patent application according to the patent laws of each issuing country. Royalty Agreements Pursuant to the Agreement and Plan of Merger entered into on April 11, 2016 between our predecessor entities, LAT Pharma LLC and NanoAntibiotics, Inc., BioVie is obligated to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma Members, PharmaIn Corporation, and The Barrett Edge, Inc. The Company and PharmaIN Corporation, LAT Pharma’s former partner focused on the development of new modified drug candidates in the same therapeutic field but not including BIV201, had agreed to pay royalties equal to less than 1% of future net sales of each company’s ascites drug development programs, or if such program is licensed to a third party, less than 5% of each company’s net license revenues. On December 24, 2018, the Company returned its partial ownership rights to the PharmaIN modified terlipressin development program and simultaneously paid the remaining balance due on a related debt. PharmaIN, Corp. rights to our program remain unchanged. Additionally the Company obligation to pay a low single digit royalty on the net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma LLC members, and The Barrett Edge, Inc. pursuant to the Agreement and Plan of Merger, dated April 11, 2016, by and between LAT Pharma LLC. The Company has an obligation to pay a low single digit royalty on net sales of all terlipressin products covered by specified patents up to a maximum of $200,000 per year pursuant to the Technology Transfer Agreement, dated July 25, 2016, by and between us and the University of Padova (Italy). Pursuant to the Technology Transfer Agreement entered into on July 25, 2016 between BioVie and the University of Padova (Italy), BioVie is obligated to pay a low single digit royalty on net sales of all terlipressin products covered by US patent no. 9,655,645 and any future foreign issuances capped at a maximum of $200,000 per year. F- 23 Table of Contents 9. Income Taxes Significant components of the Company’s deferred tax assets are as follows: June 30, 2021 June 30, 2020 Deferred tax assets: Tax loss carryforward $ 1,454,837 $ 2,100,816 Intangible assets ( 327,001 ) ( 371,063 ) Stock based compensation 901,111 7,453 Valuation Allowance ( 2,028,947 ) ( 1,737,206 ) Net deferred tax assets $ — $ — At June 30, 2021 and 2020, the Company has recorded a full valuation against its net deferred tax assets of $2,028,947 and $1,737,206, respectively, since in the judgement of management, these assets are not more than likely than not to be realized. The change in the valuation allowance during the year ended June 30, 2021 was $291,741. At June 30, 2021, the Company had a Net Operating Loss (“NOL”) carryforward of approximately $ 18,190,000 . NOL’s generated prior to 2018 will expire during the years ranging from 2032 to 2037. The Company has no current tax expense due to its losses. Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the years ended June 30, 2021 and 20120 is as follows: 2021 2020 Income tax expense at federal statutory rate 21 % 21 % State taxes, net of federal benefit 9 % 7 % Change in valuation allowance - 30 % - 28 % Effective tax rate — — 10. Subsequent Events On August 11, 2021, the Company closed a registered public offering issuing 2,500,000 of its Class A common stock at $8.00 per share, resulting in net proceeds to the Company of approximately $ 17.8 million, net of issuance cost of approximately $ 2.2 million. F- 24