BIOVIE INC. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2022 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________to _____________ Commission File Number: 001-39015 BIOVIE INC. (Exact name of registrant as specified in its charter ) Nevada 46-2510769 (State or other jurisdiction of incorporation or organization) (I.R.S. Empl. Ident. No.) 680 W Nye Lane Suite 201 Carson City , NV 89703 (Address of principal executive offices, Zip Code) (775) 888-3162 (Registrant’s telephone number, including area code) Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, par value $0.0001 per share BIVI The Nasdaq Stock Market, LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company x Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x There were 24,984,083 shares of the Registrant’s $0.0001 par value Class A common stock outstanding as of May 11, 2022. TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Item 1. Financial Statements 1 Condensed Balance Sheets at March 31, 2022 (unaudited) and June 30, 2021 1 Condensed Statements of Operations (unaudited) - for the three months and nine months ended March 31, 2022 and 2021 2 Condensed Statements of Cash Flows (unaudited) - for the nine months ended March 31, 2022 and 2021 3 Condensed Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) - for the periods from July 1, 2020 through March 31, 2021 and July 1, 2021 through March 31, 2022 4 Notes to Unaudited Condensed Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 21 PART II – OTHER INFORMATION Item 1. Legal Proceedings 22 Item 1A. Risk Factors 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 23 SIGNATURES 24 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include, among others; our research and development activities and, distributor channel; compliance with regulatory impositions requirements; and our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business. When used in this report, the terms “BioVie”, “Company”, “we”, “our”, and “us” refer to BioVie Inc. Table of Contents PART I – FINANCIAL INFORMATION Item 1. Financial Statements BioVie Inc. Condensed Balance Sheets March 31 June 30, 2022 2021 ASSETS (Unaudited) CURRENT ASSETS: Cash $ 24,506,813 $ 4,511,642 Other assets 284,967 93,487 Total current assets 24,791,780 4,605,129 OTHER ASSETS: Operating lease right-of-use assets 127,105 — Intangible assets, net 923,817 1,095,849 Goodwill 345,711 345,711 Total other assets 1,396,633 1,441,560 TOTAL ASSETS $ 26,188,413 $ 6,046,689 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 1,206,323 $ 996,374 Current portion of other liabilities 580,625 — Current portion of operating lease liabilities 29,250 — Warrant liabilities 1,023,294 — Embedded derivative liability 1,477,880 — Total current liabilities 4,317,372 996,374 Other liabilities, net of current portion 193,542 — Operating lease liabilities, net of current portion 97,779 — Note payable net of financing costs and unearned premium and discount ($3,375,064) 11,624,935 — TOTAL LIABILITIES 16,233,628 996,374 Commitments and contingencies (Note 11) STOCKHOLDERS’ EQUITY : 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 March 31, 2022 and June 30, 2021, respectively; 24,984,083 and 22,333,324 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively 2,496 2,232 Additional paid in capital 252,833,422 229,933,505 Accumulated deficit ( 242,881,133 ) ( 224,885,422 ) Total stockholders’ equity 9,954,785 5,050,315 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 26,188,413 $ 6,046,689 See accompanying notes to unaudited condensed financial statements - 1 - Table of Contents BioVie Inc. Condensed Statements of Operations (Unaudited) Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended March 31 2022 March 31 2021 March 31 2022 March 31 2021 OPERATING EXPENSES: Amortization $ 57,344 $ 57,344 $ 172,032 $ 172,032 Research and development expenses 3,577,142 789,577 11,385,586 2,019,557 Selling, general and administrative expenses 2,114,348 2,154,590 6,403,508 4,260,042 TOTAL OPERATING EXPENSES 5,748,834 3,001,511 17,961,126 6,451,631 LOSS FROM OPERATIONS ( 5,748,834 ) ( 3,001,511 ) ( 17,961,126 ) ( 6,451,631 ) OTHER (INCOME) EXPENSE: Change in fair value of derivative liabilities 386,450 — ( 1,168,804 ) ( 8,279,919 ) Interest expense 918,633 — 1,236,010 559,455 Interest income ( 13,273 ) ( 8,643 ) ( 32,621 ) ( 14,408 ) TOTAL OTHER EXPENSE (INCOME), NET 1,291,810 ( 8,643 ) 34,585 ( 7,734,872 ) NET (LOSS)/INCOME $ ( 7,040,644 ) $ ( 2,992,868 ) $ ( 17,995,711 ) $ 1,283,241 Deemed dividends - related party — — — 53,598,320 NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 7,040,644 ) $ ( 2,992,868 ) $ ( 17,995,711 ) $ ( 52,315,079 ) NET LOSS PER COMMON SHARE - Basic $ ( 0.28 ) $ ( 0.22 ) $ ( 0.73 ) $ ( 4.64 ) - Diluted $ ( 0.28 ) $ ( 0.22 ) $ ( 0.73 ) $ ( 4.64 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic 24,984,083 13,919,933 24,555,382 11,269,212 - Diluted 24,984,083 13,919,933 24,555,382 11,269,212 See accompanying notes to unaudited condensed financial statements - 2 - Table of Contents BioVie Inc. Condensed Statements of Cash Flows (Unaudited) Nine Months Ended Nine Months Ended March 31, 2022 March 31, 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 17,995,711 ) $ 1,283,241 Adjustments to reconcile net (loss) income to net cash used in operating activities: Amortization of intangible assets 172,032 172,032 Stock based compensation - restricted stock 384,454 — Stock based compensation expense - stock options 4,004,718 2,340,533 Amortization of financing costs 56,740 — Accretion of unearned loan discount 533,815 537,275 Accretion of loan premium 94,444 — Amortization of operating lease, net ( 77 ) — Change in fair value of derivative liabilities ( 1,168,804 ) ( 8,279,919 ) Changes in operating assets and liabilities: Other assets ( 191,480 ) 332,930 Accounts payable and accrued expenses 209,949 169,228 Other liabilities 774,167 — Net cash used in operating activities ( 13,125,753 ) ( 3,444,680 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 18,511,009 15,628,010 Payment of convertible debenture - related party — ( 1,821,818 ) Proceeds from convertible debenture - related party — 436,000 Proceeds from exercise of warrants — 516,551 Proceeds from note payable net of financing costs 14,609,915 — Net cash provided by financing activities 33,120,924 14,758,743 Net increase in cash 19,995,171 11,314,063 Cash, beginning of period 4,511,642 37,195 Cash, end of period $ 24,506,813 $ 11,351,258 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 551,011 $ 22,180 Cash paid for taxes $ — $ — SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: Deemed dividends - related party $ — $ 53,598,320 Right of use assets obtained in exchange for lease obligations $ 130,039 $ — See accompanying notes to unaudited condensed financial statements - 3 - Table of Contents BioVie Inc. Condensed Statements of Changes in Stockholders’ Equity (Deficit) For the periods July 1, 2020 though March 31, 2021 and July 1, 2021 through March 31, 2022 (Unaudited) Additional Total Common Stock Common Stock Paid in Accumulated Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance, June 30, 2020 5,204,392 $ 520 $ 19,538,742 $ ( 41,037,898 ) $ ( 21,498,636 ) Proceeds from issuance of common stock,net of cost of $ 2,371,790 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 2,210 — — — — Net income — — — 7,333,916 7,333,916 Balance, September 30, 2020 13,916,164 1,391 101,896,586 ( 87,302,302 ) 14,595,675 Stock-based compensation — — 1,536,929 — 1,536,929 Net loss — — — ( 3,057,807 ) Balance, December 31, 2020 13,916,164 1,391 103,433,515 ( 90,360,109 ) 13,074,797 Stock based compensation — — 803,604 — 803,604 Cashless exercise of warrants 304 — — — — Proceeds from exercise of warrants 41,324 4 516,547 — 516,551 Net loss — — — ( 2,992,868 ) ( 2,992,868 ) Balance, March 31, 2021 13,957,792 $ 1,395 $ 104,753,666 $ ( 93,352,977 ) $ 11,402,084 Balance June, 30, 2021 22,333,324 $ 2,232 $ 229,933,505 $ ( 224,885,422 ) $ 5,050,315 Proceeds from issuance of common stock, net cost of $ 2,224,992 2,592,000 259 18,510,750 — 18,511,009 Stock based compensation - restricted stock 37,049 3 286,756 — 286,759 Stock option based compensation — — 1,926,962 — 1,926,962 Net loss — — — ( 5,540,753 ) ( 5,540,753 ) Balance, September 30, 2021 24,962,373 2,494 250,657,973 ( 230,426,175 ) 20,234,292 Stock based compensation - restricted stock 21,710 2 97,693 — 97,695 Stock option based compensation — — 1,147,422 — 1,147,422 Net loss — — — ( 5,414,317 ) ( 5,414,317 ) Balance, December 31, 2021 24,984,083 2,496 251,903,088 ( 235,840,489 ) 16,065,095 Stock option based compensation — — 930,334 — 930,334 Net loss — — — ( 7,040,644 ) ( 7,040,644 ) Balance, March 31, 2022 24,984,083 $ 2,496 $ 252,833,422 $ ( 242,881,133 ) $ 9,954,785 See accompanying notes to unaudited condensed financial statements - 4 - Table of Contents BIOVIE INC. Notes to Condensed Financial Statements March 31, 2022 and 2021 (unaudited) 1. Background Information BioVie Inc. (the “Company” or “we” or “our”) is a clinical-stage company developing innovative drug therapies to treat chronic debilitating conditions including liver disease and neurological and neuro-degenerative disorders and certain cancers. In liver disease, our Orphan Drug candidate BIV201 (continuous infusion terlipressin) is being developed as a future treatment option for patients suffering from ascites and other life-threatening complications of advanced liver cirrhosis caused by NASH, hepatitis, and alcoholism. The initial target for BIV201 therapy is refractory ascites. These patients suffer from frequent life-threatening complications, generate more than $5 billion in annual treatment costs, and have an estimated 50% mortality rate within 6 to 12 months. The US Food and Drug Administration (FDA) has not approved any drug to treat refractory ascites. A Phase 2a clinical trial of BIV201 was completed in 2019, and a multi-center, randomized 30-patient Phase 2b trial is currently underway. As of March 31, 2022, ten of the thirteen planned US study centers had been activated and are actively screening and enrolling patients in the study. Top-line results from this trial are expected in early 2023. The BIV201 development program was initiated by 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. 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. In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc. (“NeurMedix”), a privately held clinical-stage pharmaceutical company, in June 2021 (See Note 5 Related Party Transactions ). The acquired assets included NE3107, a potentially selective inhibitor of inflammatory ERK signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107 is a novel orally administered small molecule that is thought to inhibit inflammation-driven insulin resistance and major pathological inflammatory cascades with a novel mechanism of action. There is emerging scientific consensus that both inflammation and insulin resistance may play fundamental roles in the development of Alzheimer’s and Parkinson’s Disease, and NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from Alzheimer’s and 1 million from Parkinson’s. The FDA has authorized a potentially pivotal Phase 3 randomized, double-blind, placebo-controlled, parallel group, multicenter study to evaluate NE3107 in subjects who have mild to moderate Alzheimer’s disease (NCT04669028). In August 2021, the study was initiated and the Company is anticipating top line results in the first half of 2023. On January 20, 2022, the Company initiated a study by treating the first patient, in it’s Phase 2 study assessing NE3107’s safety and tolerability and potential pro-motoric impact in Parkinson’s disease patients. The NM201 study (NCT05083260) is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD). Participants will be treated with carbidopa/levodopa and NE3107 or placebo. Forty patients with a defined PD medication “off state” will be randomized 1:1 placebo to: active NE3107 20 mg twice daily for 28 days. Safety assessments will look at standard measures of patient health and potential for drug-drug interactions affecting L-dopa pharmacokinetics and activity. Exploratory efficacy assessments will use the Motor Disease Society Unified Parkinson’s Disease Rating (MDS-UPDRS) parts 1-3, ON/OFF Diary, and Non-Motor Symptom Scale. Topline results are expected for the NM201 study in mid-2022. - 5 - Table of Contents Inflammation-driven insulin resistance is believed to be implicated in a broad range of serious diseases, including multiple myeloma and prostate cancer, and we plan to begin exploring these opportunities in the coming months using NE3107 or related compounds acquired in the NeurMedix asset purchase. NE3107 is patented in the United States, Australia, Canada, Europe and South Korea. 2. Liquidity 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 March 31, 2022, the Company had working capital of approximately $ 20.5 million , cash of approximately $24.5 million, stockholders’ equity of approximately $10.0 million, and an accumulated deficit of approximately $242.9 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 efforts, as well as its ability to secure additional financing as needed. Although our 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 continual widespread health emergencies or pandemics such as the coronavirus (“COVID-19”) pandemic (and its related variants), has led to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability. Although some jurisdictions have relaxed these measures, others have not or have reinstated them as COVID-19 cases and its variants continue to emerge. The duration and spread of the COVID-19 pandemic and the long-term impact of COVID-19 and its variants on the financial markets and the overall economy are highly uncertain and cannot be predicted at this time. 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. In addition, the COVID-19 pandemic has created a widespread labor shortage, including a shortage of medical professionals, and has impacted and may continue to impact the potential patient participation in our studies, which may adversely impact our ability to continue or complete our clinical trials in the planned timeline. Although management continues to pursue the Company’s strategic 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. - 6 - Table of Contents 3. Significant Accounting Policies Basis of Presentation – Interim Financial Information These unaudited interim condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United State of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”) for Interim Reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed financial statements furnished reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. The condensed balance sheet at June 30, 2021 was derived from audited annual financial statements for the year ended June 30, 2021 but does not contain all the footnote disclosures from the annual financial statements. These unaudited interim condensed financial statements and information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Company’s audited financial statements for the fiscal years ended June 30, 2021 and 2020 in our Annual Report on Form 10-K filed with the SEC on August 30, 2021. For a summary of significant accounting policies, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the SEC on August 30, 2021. Certain prior period amounts have been reclassified for consistency with the current period presentation. Leases The Company determines whether an arrangement contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities, and net of current portion of operating lease liabilities on our balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments. The Company does not include options to extend or terminate the lease term unless it is reasonably certain that the Company will exercise any such options. Rent expense is recognized under the operating leases on a straight-line basis. The Company does not recognize right of-use assets or lease liabilities for short-term leases, which have a lease term of twelve months or less, and instead will recognize lease payments as expense on a straight-line basis over the lease term 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 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 three and nine months ended March 31, 2022 and 2021, such amounts were excluded from the diluted loss since their effect was considered anti-dilutive due to the net loss for the period. The table below shows the number of outstanding stock options and warrants as of March 31, 2022 and 2021: Schedule of Dilutive securities were excluded from the computation of diluted loss per share March 31, 2022 March 31, 2021 Number of Shares Number of Shares Stock Options 2,438,044 755,200 Warrants 511,463 173,021 Total 2,949,507 928,221 - 7 - Table of Contents Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASU’s”). There were no recent ASUs that are expected to have a material impact on the Company’s balance sheets or statements of operations. 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 March 31, 2022 and June 30, 2021: March 31, 2022 June 30, 2021 Intellectual Property $ 2,293,770 $ 2,293,770 Less Accumulated Amortization ( 1,369,953 ) ( 1,197,921 ) Intellectual Property, Net $ 923,817 $ 1,095,849 Amortization expense was $ 57,344 in each of the three-month periods ended March 31, 2022 and 2021. Amortization expense for the nine-month period ended March 31, 2022 and 2021 was $ 172,032 and $ 172,032 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 (Remaining three months) $ 57,346 2023 229,377 2024 229,377 2025 229,377 2026 178,340 Intellectual Property, Net $ 923,817 5. Related Party Transactions Asset Acquisition with NeurMedix On April 27, 2021, the Company entered into an Asset Purchase Agreement (“APA”) with 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 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 APA, following the closing, the Company was potentially 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 Company’s achievement of certain clinical, regulatory and commercial milestones related to the drug candidates to be acquired 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 Amendment No. 1 to the APA, dated May 9, 2021, the Company is now obligated to deliver to NeurMedix (or its successor) 4.5 million shares upon the achievement of each of the four milestones set forth in the APA, for an aggregate of up to 18 million shares, 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. - 8 - Table of Contents On June 10, 2021, and pursuant to the APA, 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 at the time of the transaction. Equity Transactions with Acuitas On September 22, 2020, concurrent with the closing of the Company’s registered public 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; 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, 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. 6. Other Liabilities Other liabilities represent retention bonus arrangements with certain employees that was recognized in August 2021 totaling $ 1,161,000 and included in the accompanying statement of operations for the nine months ended March 31, 2022. The payment terms are equal monthly installments over a 24-month period and began in August 2021. The current portion of the liability was $580,625 and the non-current portion was $193,542 in the accompanying balance sheet at March 31, 2022. - 9 - Table of Contents 7. Notes Payable On November 30, 2021, (the “Closing Date”) the Company entered into a Loan and Security Agreement and the Supplement to the Loan and Security Agreement and Promissory Notes (together, the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (“AVOPI” and Avenue Venture Opportunities Fund II, L.P. (“AVOPII”) together (“Avenue”) for growth capital loans in an aggregate commitment amount of up to $20 million (the “Loan”). On the closing date, $15 million funded (“Tranche 1”) and up to $5 million will be made available to the Company on or prior to September 15, 2022, subject to the Company’s achievement of certain milestones with respect to certain of its ongoing clinical trials (“Tranche 2”). The Loan bears interest at an annual rate equal to the greater of (a) the sum of 7.00% plus the prime rate as reported in The Wall Street Journal and (b) 10.75%. The Loan is secured by a lien upon and security interest in all of the Company’s assets, including intellectual property, subject to agreed exceptions. The maturity date of the Loan is December 1, 2024. An additional growth capital loan in an amount equal to $5 million may be available (i) upon the Company’s achievement of additional milestones with respect to certain of its ongoing clinical trials (ii) upon the mutual written agreement of the Company and the Lenders each acting in its sole discretion, and (iii) subject to execution and delivery by the Company and the Lenders of amendments to the loan documents and the Warrant (as defined below) to reflect such additional loan and approval of each Lender’s investment committee (“Tranche 3”). The Loan Agreement requires monthly interest-only payments during the first eighteen months of the term of the Loan, which may be increased up to an additional six months from the end of such eighteen-month period prior to receipt of the Tranche 2 Loan. Following the interest-only period, the Company will make equal monthly payments of principal, plus accrued interest, until the Loan’s maturity date when all remaining principal and accrued interest is due. If the Company prepays the Loan, it will be required to pay (a) a prepayment fee in an amount equal to 3.0% of the principal amount of the Loan that is prepaid during the interest-only period; and (b) a prepayment fee in an amount equal to 1.0% of the principal amount of the Loan that is prepaid after the interest-only period. At the Loan’s maturity date, or on the date of the prepayment of the Loan, a final payment equal to 4.25% of the sum of (a) the Loan commitment amount under Tranche 1 and Tranche 2, plus (b) the aggregate principal amount of additional growth capital loans borrowed under Tranche 3. The Loan Agreement includes a conversion option to convert up to $5 million of the principal amount of the Loan outstanding at the option of the Lenders, into shares of the Company’s Class A common stock at a conversion price of $6.98 per share. On the Closing Date, the Company issued to the Lenders warrants to purchase 361,002 shares of Class A common stock of the Company (the “Warrants”) at an exercise price per share equal to $5.82 (the “Stock Purchase Price”). The warrants are exercisable until November 30, 2026 (the “Expiration Date”). The amount of the carrying value of the notes payable were determined by allocating portions of the outstanding principal of the notes to the fair value of the warrants of approximately $1.4 million and the fair value of the embedded conversion option of approximately $2.2 million. Accordingly, the total amount of unearned discount of approximately $3.7 million, the total direct financing cost of approximately $390,000 and premium of $850,000 are recognized on an effective interest method over term of the Loan. The adjusted effective interest rate is 25%. The carrying value of notes payable at March 31, 2022 was approximately $11.6 million, net of unearned discount of approximately $3.1 million, unamortized direct costs of approximately $333,000 and accreted premium of approximately $94,000 in the accompanying balance sheets. The total interest expense of approximately $919,000 and $1.2 million for the three and nine months ended March 31, 2022, respectively; was recognized in the accompanying statements of operations. The amortization of financing costs was approximately $43,000 and $57,000 for the three and nine months ended March 31, 2022, respectively. The accretion of loan premium was approximately $71,000 and $94,000 for the three and nine months ended March 31, 2022, respectively. The accretion of unearned loan discount was approximately $400,000 and $534,000 for the three and nine months ended March 31, 2022, respectively. As of March 31, 2022, the outstanding principal balance of $15 million would be paid in 18 monthly equal installments beginning July 1, 2023; a total of $10 million and $5 million in the fiscal years ended June 30, 2024 and 2025 respectively. The following is a summary of the Note Payable as of March 31, 2022 and June 30, 2021: March 31, 2022 June 30, 2021 Note Payable $ 15,000,000 $ — Less debt financing costs ( 333,345 ) Less unearned discount ( 3,136,163 ) Plus accretion of loan premium 94,444 — Note Payable, net of financing costs and premiums $ 11,624,935 $ — Estimated future amortization expense and accretion of premium is as follows: Schedule of Estimated future amortization expense and accretion of premium Unearned Discount Debt Financing Loan accretion Premium Year ending June 30, 2022 (Remaining three months) $ 400,361 $ 42,555 $ 70,834 2023 1,601,445 170,219 283,333 2024 1,023,145 108,751 283,333 2025 111,212 11,820 118,056 Total $ 3,136,163 $ 333,345 $ 755,556 - 10 - Table of Contents 8. Fair Value Measurements At March 31,2022 and June 30, 2021, the estimated fair value of derivative liabilities measured on a recurring basis are as follows: Fair Value Measurements at March 31, 2022 Level 1 Level 2 Level 3 Total Derivative liability - Warrants $ — $ — $ 1,023,294 $ 1,023,294 Derivative liability -Conversion option on notes payable — — 1,477,880 1,477,880 Total derivatives $ — $ — $ 2,501,174 $ 2,501,174 Fair Value Measurements at June 30, 2021 Level 1 Level 2 Level 3 Total Derivative liability - Warrants $ — $ — $ — $ — Derivative liability -Conversion option on note payable — — — — Total derivatives $ — $ — $ — $ — The following table presents the activity for liabilities measured at fair value unobservable inputs for the nine months ended March 31, 2022: Derivative liabilities - Warrants Derivative liability - Conversion Option on Convertible Debenture Balance at July 1, 2021 $ — $ — Additions to level 3 liabilities 1,456,512 2,213,466 Change in in fair value of level 3 liability ( 433,218 ) ( 735,586 ) Transfer in and/or out of Level 3 — — Balance at March 31, 2022 $ 1,023,294 $ 1,477,880 The following table presents the activity for liabilities measured at fair value unobservable inputs for the nine months ended March 31, 2021: Derivative liabilities - Warrants Derivative liability - Conversion Option on Convertible Debenture Beginning 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 March 31, 2021 $ — $ — - 11 - Table of Contents The fair values of derivative liabilities for the warrants and conversion option at March 31, 2022 were approximately $1 million and approximately $1.5 million, respectively. The total change in the fair value of the derivative liabilities totaled approximately $386,000 and $1.2 million for the three and nine months ended March 31, 2022 respectively, and accordingly, was recorded in the accompanying statement of operations. The assumptions used in the Black Scholes model to value the derivative liabilities at March 31, 2022 included the closing stock price of $ 4.50 per share, and for the warrants the exercise price of $ 5.82 , 5-year term, risk free rate of 1.26 % and volatility of 74.796 % . and for the embedded derivative liability of the conversion option, the conversion price of $ 6.98 ; 3-year term, risk free rate of 0.97 % and volatility of 76.15 % . 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 and anti-dilution provisions or adjustments to the strike price due to an occurrence of a future event; are accounted as derivative financial instruments. The warrants issued on November 30, 2021 in connection with the Avenue loan financing were not considered to be indexed to the Company’s own stock, and accordingly, were recorded as a derivative liability at fair value in the accompany balance sheet at March 31, 2022. The Black Scholes model was used to calculate the fair value of the warrant derivative to bifurcate the warrant derivative amount from the Avenue loan amount funded. The warrants are recorded at their fair values at the date of issuance and remeasured at March 31, 2022. The assumptions used for the fair value calculation at November 30, 2021 follows: the closing stock price of $ 6.44 per share; the exercise price of $ 5.82 ; 5 year term; a risk free rate of 1.14 % and volatility of 74.4 % . Embedded derivative liability – Conversion Option The embedded derivative represents the optional conversion feature of up to $5.0 million of the outstanding Avenue note amounts meets the definition of a derivative and requires bifurcation from the loan amount. The Black Scholes model was used to calculate the fair value of the embedded derivative to bifurcate the embedded derivative amount representing the conversion option from the Avenue loan amount funded. The assumption used for the fair value calculation at November 30, 2021 follows: the closing stock price of $ 6.44 per share; the conversion price of $ 6.98 ; 3 year term; risk free rate of 0.81 % and volatility of 76.85 % . 9. Equity Transactions Stock Options The following table summarizes the activity relating to the Company’s stock options for the nine months ended March 31, 2022: Options Weighed- Average Exercise Price Weighted Remaining Average Contractual Term Aggregate Intrinsic Value Outstanding at June 30, 2021 755,200 $ 4.34 4.4 $ 2,569,232 Granted 1,763,169 6.69 9.5 — Options Expired ( 7,200 ) 29.17 0.0 Options Forfeited ( 73,125 ) ( 13.91 ) — — Outstanding at March 31, 2022 2,438,044 $ 8.63 7.9 $ 678,545 Exercisable at March 31, 2022 675,825 $ 10.84 6.2 $ 18,480 - 12 - Table of Contents The fair value of each option grant on the date of grant is estimated using the Black-Scholes option. The pricing model reflects the following weighted-average assumptions for the nine months ended March 31, 2022 and 2021: March 31, 2022 March 31, 2021 Expected life of options (In years) 5 5 Expected volatility 75.12 % 77.05 % Risk free interest rate 1.6 % 0.5 % Dividend Yield 0 % 0 % Expected volatility is based on the historical volatilities of the daily closing price of the common stock of three comparable companies 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 option-based compensation expense of approximately $930,000 and $804,000 for three-month periods ended March 31, 2022 and 2021, respectively; and of approximately $4.0 million and $2.3 million for nine-month periods ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was approximately $ 7.1 million of unrecognized compensation cost related to non-vested stock options granted to Directors and Officers and other employees, which is expected to be recognized over a weighted-average period of approximately 4.1 years. The following is a summary of stock options listed by exercise price , the number options outstanding and exercisable as of March 31, 2022: Exercise Price Outstanding Weighted Average Contract Life Exercisable $ 2.74 124,167 5.0 — $ 2.80 7,200 2.8 7,200 $ 3.20 248,167 5.0 24,833 $ 3.24 25,000 5.0 — $ 3.75 4,800 1.8 4,800 $ 6.25 1,600 1.6 1,600 $ 7.50 25,600 4.0 25,600 $ 7.74 1,365,835 4.4 273,167 $ 8.75 1,600 2.0 1,600 $ 9.54 800 3.5 800 $ 9.90 800 3.5 800 $ 12.50 4,000 0.8 4,000 $ 13.91 618,475 3.7 321,425 $ 25.00 1,600 0.5 1,600 $ 26.25 2,000 0.2 2,000 $ 27.50 — — — $ 28.75 1,600 0.3 1,600 $ 31.25 — — — $ 42.09 4,800 3.8 4,800 2,438,044 675,825 - 13 - Table of Contents Stock Warrants The following table summarizes warrant activity during the nine months ended March 31, 2022: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value Outstanding and exercisable at June 30, 2021 158,761 $ 10.37 3.1 $ 1,765,437 Granted 361,002 5.82 5.0 — Expired ( 8,300 ) 62.50 — — Exercised — — — — Outstanding and exercisable at March 31, 2022 511,463 $ 6.31 4.0 $ 271,187 Of the above warrants, 1,091 expire in the fiscal year ending June 30, 2022, 4,815 expire in the fiscal year ending June 30, 2023, 2,714 expire in the fiscal year ending June 30, 2025, and 502,843 expire in the fiscal year ending June 30, 2026. Issuance of common stock for cash 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 costs of approximately $2.2 million. On September 24, 2021, the Company issued 92,000 of its Class A common stock at $8.00 per share in connection with the underwriters’ exercise of its over-allotment option in for the August 2021 registered public offering, resulting in net proceeds to the Company of approximately $707,000, net of issuance cost of approximately $29,000. Issuance of Shares for Services On August 20, 2021, the Company awarded 58,759 restricted stock units (“RSUs”) to the President and CEO under the Company’s 2019 Omnibus Incentive Equity Plan (the “2019 Omnibus Plan”) as his salary for the period from April 27, 2021, the date of his appointment, through December 31, 2021. The number of RSUs awarded was based on a prorated annual base salary of $600,000 at a 10% discount to the grant date fair value of $7.74 per share of the Company’s common stock. Each RSU awarded to the CEO entitles him to receive one share of common stock upon vesting. A total of 15,339 RSUs (representing the pro rata portion of the RSU award for the period from April 27, 2021 to June 30, 2021) vested at the grant date, 21,710 vested at September 30, 2021 and 21,710 vested at December 31, 2021. Accordingly, the common stock was issued to the CEO at each of the quarter end vesting dates. The stock-based compensation expense related to these RSUs totaled $97,695 for the fiscal year ended June 30, 2021 and $384,454 for the nine month period ended March 31, 2022, respectively. There were no stock-based compensation expense related to these RSUs for the three month period ended March 31, 2022 and 2021. Issuance of Stock Options On August 20, 2021, the Company granted, under the 2019 Omnibus Plan, stock options to purchase 1,365,835 shares of common stock to the executive management team. Twenty percent (20%) of the shares underlying the options awarded vested on the grant date, and the remaining 80% vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The exercise price of the options is $7.74 per share, the grant date fair value of the stock, and the options terminate on the earlier of the tenth anniversary of the grant date or the date as of which the options were fully exercised. On February 1, 2022, the Company granted stock options to purchase 124,167 shares of common stock to a new employee. Twenty percent (20%) of the shares underlying the options awarded vested on the grant date, and the remaining 80% vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The exercise price is $3.20 per share, the grant date fair value, and the options terminate on the tenth anniversary of the grant date. During the three months ended March 31, 2022, the Company granted, stock options to purchase shares of common stock totaling 273,167 to four new employees. The exercise prices per share are $3.20; $2.74 and $3.24, which were fair values of the Company’s common stock on the respective grant dates. Twenty percent (20%) of the shares underlying the options awarded vest on the one year anniversary of the grant date, and the remaining 80% vest in equal monthly installments over 48 month. options terminate on the tenth anniversary of the grant date or date as of which the options were fulling exercised. Forfeiture of Stock Options On August 27, 2021, the Chief Executive Officer forfeited unvested stock options to purchase up to 73,125 shares of common stock that were previously granted to him as compensation as an independent director of the board. - 14 - Table of Contents 10. Leases Office Leases From July 1, 2019 to October 31, 2021, the Company paid monthly rent of $1,000 to Acuitas for its headquarter office at 2120 Colorado Avenue Suite 230, Santa Monica, CA 90404. Effective November 1, 2021, the Company relocated its headquarters to Nevada. The Company paid an annual rent of $2,200 for the address at 680 W Nye Lane, Suite 201, Carson City Nevada 897603. The Nevada lease is an annual lease. On June 1, 2021, the Company assumed a NeurMedix office lease that was extended to February 2022 at 6165 Greenwich Dr Suite 150, San Diego, CA 92122. The lease agreement required monthly payments of $8,782. On February 26, 2022 the Company’s San Diego office relocated to 5090 Shoreham Place, San Diego, CA 92122. (the “New Office”). The New Office lease term for 38 months, commenced on March 1, 2022 with a 2 month rent abatement. The monthly base rate payment of $4,175 begins June 1, with annual increases of three percent. The operating lease cost recognized in our statement of operations was approximately $23,000 and $76,500 for the three and nine months ended March 31, 2022, and approximately $3,000 and $9,000 for the three and nine months ended March 31, 2021. The following table provides balance sheet information related to leases as of March 31, 2022 and June 30, 2021: March 31, 2022 June 30, 2021 Assets Operating lease, right-of-use asset, net $ 127,105 $ — Liabilities Current portion of operating lease liabilities $ 29,250 $ — Operating lease liabilities, net of current portion 97,779 — Total operating lease liabilities $ 127,029 $ — At March 31, 2022, the future estimated minimum lease payments under non-cancelable operating leases are as follows: Year ending June 30: 2022 (remaining 3 months) $ 4,175 2023 50,600 2024 52,156 2025 44,636 Total minimum lease payments 151,567 Less amount representing interest ( 24,538 ) Present value of future minimum lease payments 127,029 Less current portion of operating lease liabilities ( 29,250 ) Operating lease liabilities, net of current portion $ 97,779 The weighted average remaining lease term and discount rate as of March 31, 2022 and 2021 were as follows: March 31, 2022 June 30, 2021 Weighted average remaining lease term (Years) Operating leases 3.1 — Weighted average discount rate Operating leases 10.75 % — - 15 - Table of Contents 11. Commitments and Contingencies 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 (“IPR”) of our U.S. Patent No. 9,655,945 titled “Treatment of Ascites” (the “’945 patent”). On November 13, 2019, the Patent Trial and Appeal Board of USPTO issued a written decision in the IPR from which no appeal was taken. The decision revoked all of the claims of the patent as lacking novelty or as obvious. 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 review and authorization, 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 count. 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. 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. 12. Employee Benefit Plan On August 1, 2021, the Company began sponsoring an employee benefit plan subject to Section 401(K) of the Internal Revenue Service Code (the “401K Plan”) pursuant to which, all employees meeting eligibility requirements are able to participate. Subject to certain limitations in the Internal Revenue Code, eligible employees are permitted to make contributions to the 401K Plan on a pre-tax salary reduction basis and the Company will match 5% of the first 5% of an employee’s contributions to the 401K Plan. For the three and nine months ended March 31, 2022, the Company’s contributions to the 401K Plan totaled approximately $ 28,700 and $ 75,100 , respectively. 13. Subsequent Events On April 5, 2022, the Company granted stock options to purchase 755,000 shares of common stock to the independent directors of the board as compensation for services at an exercise price of $5.04 per share, the grant date fair value. Twenty-five percent (25%) of the shares underlying the options awarded vested on the grant date, and the remaining 75% vest ratably over three years on the first, second, and third anniversary of the grant date. The options terminate on the earlier of the fifth anniversary of the grant date or the date as of which the options are fully exercised. - 16 - Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors among others, include our; research and development activities and, distributor channel; compliance with regulatory impositions requirements; and our capital needs Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission (the “SEC”) that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business. The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this report. Management’s Discussion BioVie Inc. is a clinical-stage company developing innovative drug therapies to overcome unmet medical needs in chronic debilitating conditions. In liver disease , our Orphan Drug candidate BIV201 (continuous infusion terlipressin) is being developed as a future treatment option for patients suffering from ascites and other life-threatening complications of advanced liver cirrhosis caused by NASH, hepatitis, and alcoholism. The initial target for BIV201 therapy is refractory ascites. These patients suffer from frequent life-threatening complications, generate more than $5 billion in annual treatment costs, and have an estimated 50% mortality rate within 6 to 12 months. The US Food and Drug Administration (FDA) has not approved any drug to treat refractory ascites. A Phase 2a clinical trial of BIV201 was completed in 2019, and a multi-center, randomized and controlled Phase 2b trial is currently underway at ten of thirteen planned US medical centers including Vanderbilt University, the Mayo Clinic, and the University of Pennsylvania (NCT04112199). Top-line results from this trial are expected in early 2023, to be followed by a proposed single pivotal Phase 3 clinical trial, subject to favorable FDA review. In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc., a privately held clinical-stage pharmaceutical company and related party affiliate, in June 2021. The acquired assets include NE3107, a potentially selective inhibitor of inflammatory ERK signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107is a novel orally administered small molecule that is thought to inhibit inflammation-driven insulin resistance and major pathological inflammatory cascades with a novel mechanism of action. There is emerging scientific consensus that both inflammation and insulin resistance may play fundamental roles in the development of Alzheimer’s and Parkinson’s Disease, and NE3107 could, if approved, represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from Alzheimer’s and 1 million from Parkinson’s. The FDA has authorized a potentially pivotal Phase 3 randomized, double-blind, placebo-controlled, parallel group, multicenter study to evaluate NE3107 in subjects who have mild to moderate Alzheimer’s disease (NCT04669028). We initiated this trial on August 5, 2021 and are targeting primary completion in the first half of 2023. - 17 - Table of Contents In addition to Alzheimer’s disease, the FDA has authorized a Phase 2 study assessing NE3107’s potential pro-motoric impact in Parkinson’s disease patients, and to assess its safety and tolerability. The NM201 study (NCT05083260) Initiated by the Company on January 20, 2022; is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD). Participants will be treated with carbidopa/levodopa and NE3107 or placebo. Forty (40) patients with a defined L-dopa “off state” will be randomized 1:1placebo: active 20 mg twice daily for 28 days. Safety assessments will look at standard measures of patient health and potential for drug-drug interactions affecting L-dopa PK and activity. Efficacy assessments will use the Motor Disease Society Unified Parkinson’s Disease Rating (MDS-UPDRS) parts 1-4, Hauser ON/OFF Diary, and Non-Motor Symptom Scale. The study was initiated on January 20, 2022 and topline results are expected in mid 2022. Inflammation-driven insulin resistance is believed to be implicated in a broad range of serious diseases, including multiple myeloma and prostate cancer, and we plan to begin exploring these opportunities in the coming months using NE3107 or related compounds acquired in the NeurMedix asset purchase. Comparison of the three months ended March 31, 2022 to the three months ended March 31, 2021 Net loss The net loss for the three months ended March 31, 2022, was approximately $7.0 million as compared to net loss of $3.0 million for the three months ended March 31, 2021. The net loss increase of $4.0 million for the three month period ended March 31, 2022 resulted from an increased loss from operations of $2.7 million primarily attributed to increased research and development activities, $919,000 increase in interest expense related to the new debt financing that funded on November 30, 2021, and $ 386,000 increase in change in fair value of the derivative liabilities. Total operating expenses for the three months ended March 31, 2022 and 2021 were approximately $5.7 million and $3.0 million respectively. The net increase of approximately $2.7 million during the three months ended March 31, 2022 was comprised of a net increase in research and development expenses of approximately $2.8 million and net decrease in selling general and administration of approximately $40,000. Approximately $1.0 million in selling, general and administration included expense related to the neuroscience operations and development of the biopharmaceutical assets purchased in June 2021. The increase in research and development related to the Alzheimer pivotal Phase 3 clinical trial that was initiated in August 2021, the initiation of the Phase 2 Parkinson study in January 2022, and the continuation of our Orphan Drug candidate BIV201’s Phase 2b clinical trial, which was initiated in the 2021 calendar year. Research and Development Expenses Research and development expenses were approximately $3.6 million and $790,000 for the three months ended March 31, 2022 and 2021, respectively. The net increase of approximately $2.8 million, for the three months period ended March 31, 2022 was comprised of Neuroscience operational expenses of approximately $1.7 million attributed to increased activity in the Alzheimer pivotal Phase 3 clinical trial and the initiation of the Parkinson’s Phase 2 clinical trial in January 2022; an increase of $300,000 related to the continuation of Orphan Drug candidate BIV201’s Phase 2b clinical trial initiated in June 2021; and increases in salary and employee benefit expenses of $522,000 and stock-based compensation expense of $258,000. The Company expanded clinical team personnel by the hiring of the neuroscience personnel to oversee the development of the biopharmaceutical assets purchased in June 2021, our CMO who came on board on November 1, 2021 and other related clinical personnel during the three months ended March 31, 2022. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $2.1 million and $2.2 million for the three month periods ended March 31, 2022 and 2021, respectively. The components of the approximate $100,000 net decrease was comprised of increases in salary and employee benefit expenses of $250,000 and stock-based compensation expense of $364,000; an increase in investor relations and advisory fees of $527,000, and an increase in legal and other consultants, office and insurance expenses totaling $347,000; offset by $518,000 of directors’ stock-based compensation decline from 2021 and approximately $1 million related to the purchase of Neuroscience biopharmaceutical assets which closed on June 10, 2021 recognized in the three months ended March 31, 2021. Other Income/Expense Other expense, net for the three months ended March 31, 2022 was $1.3 million compared to approximately $35,000 for the three months ended March 31, 2021. The increase for the three months ended March 31, 2022, was comprised of the change in fair value of the derivative liabilities of approximately $386,000 and interest expense of approximately $918,000. In the three month period ended March 31, 2021 there were no derivative liabilities or debt outstanding. - 18 - Table of Contents Comparison of the nine months ended March 31, 2022 to the nine months ended March 31, 2021 Net (loss)/Income The net loss for the nine months ended March 31, 2022 was approximately $18.0 million as compared to net income of $1.3 million for the nine months ended March 31, 2021. The decline from net income to net loss of approximately $19.3 million was attributed to an increase in the loss from operations of approximately $11.5 million and the change in the fair value of derivative liabilities of $7.1 million and an increase in interest expense of approximately $677,000. Total operating expenses for the nine months ended March 31, 2022 were approximately $18 million as compared to $6.5 million for the nine months ended March 31, 2021. The net increase of approximately $11.5 million during the nine months ended March 31, 2022 was primarily attributed to the expanded operations of the Company from the purchase of the Neuroscience pharmaceutical assets that was completed in June 2021. The net increase was comprised of increased research and development expenses of approximately $9.4 million, attributed to the Alzheimer pivotal Phase 3 clinical trial that was initiated in August 2021 and the continuation of our Orphan Drug candidate BIV201’s Phase 2b clinical trial, which was initiated earlier in the 2021 calendar year, and an increase in selling, general and administrative expenses of $2.1 million. Research and Development Expenses Research and development expenses were approximately $11.4 million and $2.0 million for the nine months ended March 31, 2022, and 2021, respectively. The net increase of approximately $9.4 million, was comprised of the Neuroscience clinical operations of approximately $4.9 million for the activities in the Alzheimer pivotal Phase 3 clinical trial and the preparations for the initiation of the Parkinson’s Phase 2 clinical that launched in January 2022; an increase of approximately $1.3 million for the ongoing Orphan Drug candidate BIV201’s Phase 2b clinical trial; and increases in salary and employee benefit expenses of $2.1 million and stock based compensation expense of $1.0 million. The Company expanded the clinical team personnel by the hiring of the neuroscience personnel to oversee the development of the biopharmaceutical assets purchased in June 2021, our CMO who came on board on November 1, 2021 and other related clinical personnel during the three months ended March 31, 2022. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $6.4 million and $4.3 million for the nine months ended March 31, 2022 and 2021, respectively. The net increase of approximately $2.1 million was primarily comprised of increased salary and employee benefit expenses of approximately $546,000, stock based compensation expense of $2.0 million ; increased legal expense of $620,000; investor relations and advisory of $729,000; and approximately $442,000 of increased expenses related to other consulting fees, insurance premiums, office and website development expenses, as the Company operations were expanded during the nine months ended March 31, 2022 with the addition of Neuroscience operations in June 2021. These increases were offset by $1.1 million of directors’ stock-based compensation and $1.1 million related to the purchase of Neuroscience biopharmaceutical assets which closed on June 10, 2021. Other Expense/(Income) Other expense, net for the nine months ended March 31, 2022 was a nominal amount and comprised of net interest expense of $1.2 million offset by the change in fair valued of the derivative liabilities of $1.2 million compared to other income, net of $7.7 million for the nine months ended March 31, 2021 which was comprised of net interest expense of $545,000 offset by the change in fair value of $8.3 million. The increase in net interest expense and change in fair value of the derivative liabilities is related to debt financing that was funded in November 30, 2021. Capital Resources and Liquidity As of March 31, 2022, the Company had working capital of approximately $20.5 million, cash of approximately $24.5 million, stockholders’ equity of approximately $10.0 million, and an accumulated deficit of approximately $242.9 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 efforts, as well as its ability to secure additional financing as needed. - 19 - Table of Contents In November 2021, the Company closed a debt financing, pursuant to which it received a loan in the aggregate principal amount of $15 million and incurred direct financing costs of approximately $390,000. Although the increase in the Company’s 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, given the Company’s current planned operations to meet certain goals and objectives, we expect projected 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. We cannot assure you that our drug candidate will be developed, work, or receive regulatory approval; that we will ever earn revenues sufficient to support our operations or that we will ever be profitable. Furthermore, since we have no committed source of sufficient financing, we cannot assure that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations. Although management continues to pursue its strategic 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. Management intends to attempt to secure additional required funding primarily through additional equity or debt financings. We may also seek to secure required funding through sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research and development efforts, or similar transactions. However, there can be no assurance that we will be able to obtain required funding. If we are unsuccessful in securing funding from any of these sources, we will defer, reduce or eliminate certain planned expenditures in our research protocols. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment in us. The continual widespread health emergencies or pandemics such as the coronavirus (“COVID-19”) pandemic (and its related variants), has lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability. Although some jurisdictions have relaxed these measures, others have not or have reinstated them as COVID-19 cases and its variants continue to emerge The duration and spread of the COVID-19 pandemic and the long-term impact of COVID-19 and its variants on the financial markets and the overall economy, are highly uncertain and cannot be predicted at this time. 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. In addition, the COVID-19 pandemic has created a widespread labor shortage, including a shortage of medical professionals, and may possibly impact the potential patient participation in our studies of which may adversely impact our ability to continue or complete our clinical trials in the planned timeline. These circumstances raise substantial doubt on our ability to continue as a going concern. The financial statements included in this report do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. - 20 - Table of Contents Critical Accounting Policies and Estimates For the three-month and nine month periods ended March 31, 2022, there were no significant changes to the Company’s critical accounting policies as identified in the Annual Report Form 10-K for the fiscal year ended June 30, 2021. New Accounting Pronouncements The Company considered the applicability and impact of recent accounting pronouncements and determined those to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable to smaller reporting companies. Item 4. Controls and Procedures We maintain “disclosure controls and procedures.” Such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Office and Chief Financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible disclosure and procedures. The design of and disclosure controls and procedures also are based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level, as appropriate, to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rule 13a-15f and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. - 21 - Table of Contents PART II. OTHER INFORMATION Item 1. Legal Proceedings To our knowledge, neither the Company nor any of its officers or directors is a party to any material legal proceeding or litigation and such persons know of no material legal proceeding or contemplated or threatened litigation. There are no judgments against us or our officers or directors. None of our officers or directors has been convicted of a felony or misdemeanor relating to securities or performance in corporate office. Item 1A. Risk Factors We face business disruption and related risks resulting from the outbreak of the novel coronavirus 2019 (COVID-19) pandemic, which could have a material adverse effect on our business plan. The continual widespread health emergencies or pandemics such as the coronavirus (“COVID-19”) pandemic (and its related variants), has led to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability, which could materially adversely affect the clinical trials, supply chain, financial condition and financial performance of our company. Although some jurisdictions have relaxed these measures, others have not or have reinstated them as COVID-19 cases surge and its variants continue to emerge. The duration and spread of the COVID-19 pandemic and the long-term impact of COVID-19 and its variants on the financial markets and the overall economy are highly uncertain and cannot be predicted at this time. 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. In addition, the COVID-19 pandemic has created a widespread labor shortage, including a shortage of medical professionals, and has impacted and may continue to impact the potential patient participation in our studies of which may adversely impact our ability to continue or complete our clinical trials in the planned timeline. You may experience future dilution as a result of future equity offerings or if we issue shares subject to options, warrants, stock awards or other arrangements. In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering. In addition, as of March 31, 2022, there were warrants outstanding to purchase an aggregate of 511,463 shares of common stock at exercise prices ranging from $1.88 to $75.00 per share and 2,438,044 shares issuable upon exercise of outstanding options at exercise prices ranging from $2.74 to $42.09 per share. Our Loan Agreement entered into on November 30, 2021, contains a conversion feature whereby at the option of lender, up to $5 million of the outstanding loan amount maybe converted to shares of common stock at a conversion price of $6.98 per share. We may grant additional options, warrants or stock awards. To the extent such shares are issued, the interest of holders of our common stock will be diluted. Moreover, we are obligated to issue shares of common stock upon achievement of certain clinical, regulatory and commercial milestones with respect to certain of our drug candidates (i.e., NE3107, NE3291, NE3413, NE3789) pursuant to the asset purchase agreement, dated April 27, 2021, by and among the Company, NeurMedix, Inc. and Acuitas Group Holdings, LLC, as amended on May 9, 2021. The achievement of these milestones could result in the issuance of up to 18 million shares of our common stock, further diluting the interest of holders of our common stock. Item 2. Unregistered Sales of Equity Securities None Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information None - 22 - Table of Contents Item 6. Exhibits (a) Exhibit index Exhibit 31.1* Certification of Chief Executive Officer (Principal Executive Officer) required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. 31.2* Certification of Chief Financial Officer (Principal Financial Officer) required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. 32.1** Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Chief Financial Officer (Principal Financial Officer) 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 Extension Calculation Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * Filed herewith. ** Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. - 23 - 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., Signature Titles Date /s/ Cuong V Do Cuong V Do Chairman and Chief Executive Officer (Principal Executive Officer) May 11, 2022 /s/ Joanne Wendy Kim Joanne Wendy Kim Chief Financial Officer (Principal Financial and Accounting Officer) May 11, 2022 - 24 -