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Item 1. Financial Statements

2024-02-13 compared with 2023-11-08 · 395 added, 230 removed, 473 unchanged (57% of the section changed)

1 unchanged sentence

Condensed Balance Sheets

September 30,

CURRENT ASSETS:

2 unchanged sentences

Treasury Bills

Prepaids and other assets

Prepaids and other current assets

Total current assets

6 unchanged sentences

Current portion of operating lease liabilities

Current portion of note payable, net of financing cost, unearned premium and discount of $ 661,467 at September 30, 2023 and $ 894,926 at June 30, 2023

Current portion of note payable, net of financing cost, unearned premium and discount of $ 195,325 at December 31, 2023 and $ 894,926 at June 30, 2023

Warrant liabilities

2 unchanged sentences

Operating lease liabilities, net of current portion

Note payable, net of current portion, financing cost, unearned premium and discount of $ 469,937 at September 30, 2023 and $ 227,270 at June 30, 2023

Note payable, net of current portion, financing cost, unearned premium and discount of $ 0 and $ 227,270 at December 31, 2023 and June 30, 2023, respectively.

TOTAL LIABILITIES

6 unchanged sentences

Common stock, $ 0.0001 par value;

800,000,000 shares authorized at September 30, 2023 and June 30, 2023, respectively;

36,922,760 shares issued of which 36,899,880 shares are outstanding at September 30, 2023;

800,000,000 shares authorized at December 31, 2023 and June 30, 2023, respectively;

39,866,714 shares issued of which 39,843,834 shares are outstanding at December 31, 2023;

and 36,451,829 shares issued of which 36,428,949 shares outstanding at June 30, 2023;

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See accompanying notes to unaudited condensed financial

Condensed Statements of Operations and

Comprehensive Loss

Condensed Statements of Operations and Comprehensive

Three Months Ended

September 30, 2023

September 30, 2022

Six Months Ended

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

OPERATING EXPENSES:

5 unchanged sentences

( 11,494,806 )

OTHER EXPENSE (INCOME):

( 19,657,229 )

( 20,329,144 )

OTHER (INCOME) EXPENSE:

Change in fair value of derivative liabilities

( 1,690,336 )

Interest expense

3 unchanged sentences

$ ( 15,687,002 )

$ ( 19,111,909 )

$ ( 26,102,713 )

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

1 unchanged sentence

$ ( 15,687,002 )

$ ( 19,111,909 )

$ ( 26,102,713 )

NET LOSS PER COMMON SHARE

2 unchanged sentences

$ ( 15,687,002 )

$ ( 19,111,909 )

$ ( 26,102,713 )

Other comprehensive loss

4 unchanged sentences

$ ( 15,687,002 )

$ ( 19,288,500 )

$ ( 26,102,713 )

See accompanying notes to unaudited condensed financial

Condensed Statements of Cash Flows

Three Months Ended

September 30, 2023

September 30, 2022

Six Months Ended

December 31, 2023

December 31, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

11 unchanged sentences

Change in fair value of derivative liabilities

( 1,690,336 )

Changes in operating assets and liabilities:

Prepaids and other assets

( 1,446,761 )

Accounts payable and accrued expenses

1 unchanged sentence

Other liabilities

( 1,014,612 )

Net cash used in operating activities

2 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Maturity of U.S.

Proceeds from maturity of U.S.

Treasury Bills

4 unchanged sentences

( 5,000,000 )

Proceeds from exercise of stock options

Net proceeds from issuance of common stock - Related Party

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Net increase in cash and cash equivalents

3 unchanged sentences

Cash paid for interest

DISCLOSURE OF NONCASH INVESTING ACTIVITIES:

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:

Reclassification of unrealized gains on available-for-sale investments upon settlement

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Proceeds from issuance of common stock, net of costs of $368,370

Proceeds from issuance of common stock, net of costs of $94,160

- Related Party

Proceeds from issuance of common stock, net of costs of $94,160 - Related Party

( 10,415,711 )

2 unchanged sentences

( 261,385,601 )

Stock-based compensation - restricted stock units

Stock option based compensation

Cashless exercise of options

Cashless exercise of warrants

Proceeds from exercise of options

Proceeds from issuance of common stock, net of costs of $1,206,206

( 15,687,002 )

Balance, December 31, 2022

$ 303,137,216

$ ( 277,072,603 )

Balance, June 30, 2023

7 unchanged sentences

( 10,710,464 )

Reclassification of unrealized gains on available for sale investments upon settlement

Relcassification of unrealized gains on available for sale investments upon settlement

$ ( 176,591 )

Balance, September 30, 2023

( 311,936,169 )

Stock - based compensation - stock options

Stock-based compensation - restricted stock units

Proceeds from issuance of common stock, net of costs of $258,254

Issuance of common stock from vesting of - restricted stock units

( 8,401,445 )

Balance, December 31, 2023

$ 327,824,867

$ ( 320,337,614 )

See accompanying notes to unaudited condensed financial

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2023

For the Three and Six Months Ended December

31, 2023 and 2022

Background Information

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neurological and neuro-degenerative disorders and liver disease.

The Company acquired the biopharmaceutical

assets of NeurMedix, Inc.

(“NeurMedix”), from a related party privately held clinical-stage pharmaceutical company, in

The acquired assets included NE3107, a potentially selective inhibitor of inflammatory extracellular single-regulated

kinase (“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 Disease (AD) and Parkinson’s Disease (PD), and

NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated

6 million Americans suffering from AD and 1 million Americans suffering from PD.

Late in September 2023, the final patient completed

the last treatment at week 30 in the Company’s multicenter, randomized, double-blind, placebo-controlled Phase 3 study (NCT04669028)

of NE3107 in patients who have mild to moderate Alzheimer’s disease.

The database cleaning process remains underway, with the clinical

team resolving outstanding queries and entering final data into the electronic data system.

Final database lock, unblinding and subsequent

release of topline results is anticipated to occur during the fourth quarter of calendar year 2023.

The Company completed its Phase 2 study assessing

NE3107 in PD patients in the fourth quarter of calendar year 2022.

The NM201 study (NCT05083260) was a double-blind, placebo-controlled,

safety, tolerability, and pharmacokinetics study in PD participants treated with carbidopa/levodopa and NE3107.

The study was primarily

designed to assess safety (general safety in the patient population and potential for drug-drug interactions of NE3107 with levodopa);

and secondary, to look for indications of promotoric activity akin to promotoric activity and apparent enhancement of levodopa activity

observed in preclinical models.

Both the safety and efficacy objectives of the study were met.

Neuroinflammation, insulin resistance, and oxidative

stress are common features in the major neurodegenerative diseases, including AD, PD frontotemporal lobar dementia, and Amyotrophic lateral

sclerosis (ALS).

NE3107 is an orally bioavailable, blood-brain permeable, small molecule, with potential anti-inflammatory, insulin sensitizing,

and ERK-binding properties that may allow it to selectively inhibit ERK-, NFκB- and TNF-stimulated inflammation.

potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the molecule in AD

and PD patients.

The Company acquired

the biopharmaceutical assets of NeurMedix, Inc.

(“NeurMedix”) a privately held clinical-stage pharmaceutical company and a

related party in June 2021 .

The acquired assets included NE3107.

NE3107 is an investigational, 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 disease (“AD”) and Parkinson’s disease (“PD”), and NE3107 could, if

approved by U.S.

Food and Drug Administration (“FDA”), represent an entirely new medical approach to treating these devastating

conditions affecting an estimated 6 million Americans suffering from AD and 1 million Americans suffering from PD.

Neurodengenerative

Disease Program

In neurodegenerative disease, the Company’s

drug candidate NE3107 inhibits activation of inflammatory actions extracellular single-regulated kinase (“ERK”) and nuclear

factor kappa-light-chain-enhancer of activated B cells (“NFκB”) (including interactions with tumor necrosis factor (“TNF”)

signaling and other relevant inflammatory pathways) that lead to neuroinflammation and insulin resistance.

NE3107 does not interfere with

their homeostatic functions (e.g., insulin signaling and neuron growth and survival).

Both inflammation and insulin resistance are drivers

of AD and PD.

Disease (NCT05083260)

On November 29, 2023,

the Company announced the analysis of its unblinded, topline efficacy data from its Phase 3 clinical trial (NCT04669028) of NE3107 in

the treatment of mild to moderate AD.

The study has co-primary endpoints looking at cognition using the Alzheimer’s Disease Assessment

Scale-Cognitive Scale (ADAS-Cog 12) and function using the Clinical Dementia Rating-Sum of Boxes (CDR-SB).

Patients were randomly assigned,

1:1 versus placebo, to receive sequentially 5 mg of NE3107 orally twice a day for 14 days, then 10 mg orally twice a day for 14 days,

followed by 26 weeks of 20 mg orally twice daily.

Upon trial completion, as the Company began the process of unblinding

the trial data, the Company found significant deviation from protocol and current good clinical practices (“cGCPs”) violations

at 15 study sites (virtually all of which were from one geographic area).

This highly unusual level of suspected improprieties led the

Company to exclude all patients from these sites and to refer the sites to the FDA Office of Scientific Investigations (“OSI”)

for further action.

After the patient exclusions, 81 patients remained in the Modified Intent to Treat population, 57 of whom were in

the Per-Protocol population which included those who completed the trial and were verified to take study drug from pharmacokinetic data.

The trial was originally designed to be 80% powered with 125 patients

in each of the treatment and placebo arms.

The unplanned exclusion of so many patients has left the trial underpowered for the primary endpoints.

In the Per-Protocol population, which included those patients who completed the trial and who were further verified to have taken the

study drug (based on pharmacokinetic data), an observed descriptive change from baseline appeared to suggest a slowing of cognitive loss;

these same patients experienced an advantage in age deceleration vs.

placebo as measured by DNA epigenetic change.

Age deceleration is

used by longevity researchers to measure the difference between the patient’s biological age, in this case as measured by the Horvath

DNA methylation Skin Blood Clock, relative to the patient’s actual chronological age.

This test was a non-primary/secondary endpoint,

other-outcome measure, done via blood test collected at week 30 (end of study).

Additional DNA methylation data continues to be collected

and analyzed.

Disease (NCT05083260)

The Phase 2 study of

NE3107 for the treatment of PD (NCT05083260), completed in December 2022, was a double-blind, placebo-controlled, safety, tolerability,

and pharmacokinetics study in PD participants treated with carbidopa/levodopa and NE3107.

Forty-five patients with a defined L-dopa “off

state” were randomized 1:1 to placebo:NE3107 20 mg twice daily for 28 days.

This trial was launched with two design objectives:

1) the primary objective was safety and a drug-drug interaction study as requested by the FDA to measure the potential for adverse interactions

of NE3107 with carbidopa/ levodopa;

and 2) the secondary objective was to determine if preclinical indications of promotoric activity

and apparent enhancement of levodopa activity could be seen in humans.

Both objectives were met.

Neuroinflammation, insulin

resistance, and oxidative stress are common features in the major neurodegenerative diseases, including AD, PD, frontotemporal lobar dementia,

and Amyotrophic lateral sclerosis.

NE3107 is an investigational oral small molecule, blood-brain permeable, compound with potential anti-inflammatory,

insulin sensitizing, and ERK-binding properties that may allow it to selectively inhibit ERK-, NFκB- and TNF-stimulated inflammation.

NE3107’s potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the

molecule in AD and PD patients.

NE3107 is patented in the United States, Australia, Canada, Europe and South Korea.

The Company’s Orphan Drug candidate BIV201

(continuous infusion terlipressin), has been granted Fast Track designation status by the U.S.

Food and Drug Administration (“FDA”),

is being evaluated and discussed after receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for

the treatment of ascites due to chronic liver cirrhosis.

Liver Disease Program

In liver disease, our investigational drug candidate

BIV201 (continuous infusion terlipressin), which has been granted both FDA Fast Track designation status and FDA Orphan Drug status, is

being evaluated and discussed after receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for the

treatment of ascites due to chronic liver cirrhosis.

BIV201 is administered as a patent-pending liquid formulation.

The Phase 2b study

was closed before full enrollment, without clinically meaningful adverse effects associated with BIV201 treatment.

While the active agent

is approved in the U.S.

and in about 40 countries for related complications of advanced liver cirrhosis, treatment of ascites is not included

in these authorizations.

Patients with refractory ascites 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 FDA has not approved any drug to treat

refractory ascites.

In June 2021, the Company initiated a Phase 2

study (NCT04112199) designed to evaluate the efficacy of BIV201 (terlipressin, administered by continuous infusion for two 28-day treatment

cycles) combined with standard-of-care (“SOC”), compared to SOC alone, for the treatment of refractory ascites.

endpoints of the study are the incidence of ascites-related complications and change in ascites fluid accumulation during treatment compared

to a pre-treatment period.

In March 2023 the company announced enrollment

was paused and that data from the first 15 patients treated with BIV201 plus SOC appeared to show at least a 30% reduction in ascites

fluid during the 28 days after treatment initiation compared to the 28 days prior to treatment.

The change in ascites volume was significantly

different from those patients receiving SOC treatment.

Patients who completed the treatment with BIV201 experienced a 53% reduction in

ascites fluid, which was sustained (43% reduction) during the three months after treatment initiation as compared to the three-month pre-treatment

In June 2023, the Company requested and subsequently

received guidance from the FDA regarding the design and endpoints for definitive clinical testing of BIV201 for the treatment of ascites

due to chronic liver cirrhosis.

The Company is currently finalizing protocol designs for the Phase 3 study of BIV201 for the treatment

of ascites due to chronic liver cirrhosis.

While the active agent, terlipressin, is approved

and in about 40 countries for related complications of advanced liver cirrhosis, treatment of ascites is not included in these

authorizations.

Patients with refractory ascites 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 FDA has not approved any drug to treat refractory

The BIV201 development program was initiated by

LAT Pharma LLC (“LAT Pharma”).

On April 11, 2016, the Company acquired LAT Pharma and the rights to its BIV201 development

The Company currently owns all development and marketing rights to this drug candidate.

Pursuant to the Agreement and Plan of

Merger entered into on April 11, 2016, between our predecessor entities, LAT Pharma and NanoAntibiotics, Inc., the Company is obligated

to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin), if approved, to be shared by the members

of LAT Pharma, PharmaIn Corporation and The Barrett Edge, Inc.

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 this 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

The Company’s operations are subject to

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course of business.

As of September 30, 2023, the Company had working capital of approximately $ 9.6 million, cash and cash equivalents

totaling of approximately $ 21.2 million, stockholders’ equity of approximately $ 7.5 million, and an accumulated deficit of approximately

As of December 31, 2023, the Company had working capital of approximately $ 6.6 million, cash and cash equivalents

of approximately $ 20.2 million, stockholders’ equity of approximately $ 7.5 million, and an accumulated deficit of approximately

$ 320.3 million.

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to secure additional financing as needed.

Although our cash balance may possibly sustain operations over the next 12 months from the balance

sheet date if measures are taken to delay planned expenditures in our research protocols and slow the progress in the Company’s

development of next phase 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.

Although our cash balance may possibly sustain operations over the next six to nine months from

the balance sheet date if further measures are taken to delay planned expenditures in our research protocols and slow the progress in

the Company’s development and launch of next phase 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

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as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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.

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, 2023 was derived from audited

annual financial statements but does not contain all the footnote disclosures from the annual financial statements.

These unaudited

interim condensed financial statements should be read in conjunction with the Company’s audited financial statements for the

fiscal years ended June 30, 2023 and 2022 in our Annual Report on Form 10-K filed with the SEC on August 16, 2023 (the “2023 Form

A summary of significant accounting policies can also be found in those audited financial statements in the 2023 Form

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, 2023 was derived from audited annual financial statements but does not contain all the footnote disclosures

from the annual financial statements.

These unaudited interim condensed financial statements should be read in conjunction with the Company’s

audited financial statements for the fiscal years ended June 30, 2023 and 2022 in our Annual Report on Form 10-K filed with the SEC on

August 16, 2023 (the “2023 Form 10-K”).

A summary of significant accounting policies can also be found in those audited financial

statements in the 2023 Form 10-K.

Net loss per Common Share

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options, warrants, and restricted stock units.

For the three months ended September 30, 2023 and 2022, such amounts were excluded from

the diluted loss since their effect was considered anti-dilutive due to the net loss for the periods.

For the six months ended December 31, 2023 and 2022, such amounts were excluded from the

diluted loss since their effect was considered anti-dilutive due to the net loss for the periods.

The table below shows the number of outstanding

stock options, warrants and restricted stock units as of September 30, 2023 and 2022:

stock options, warrants and restricted stock units as of December 31, 2023 and 2022:

Schedule of dilutive securities were excluded from the computation of diluted loss per share

September 30, 2023

September 30, 2022

December 31, 2023

December 31, 2022

Number of Shares

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Treasury Bills with maturities

greater than three months, are accounted for as available for sale and are recorded at fair value.

Unrealized gain were included in other

comprehensive income in the accompanying statements of operations and comprehensive loss.

Upon the maturity and settlement of these investments,

realized gains were recorded as a component of interest income on the accompanying condensed statement of operations and comprehensive loss.

greater than three months on the date of purchase, are accounted for as available for sale and are recorded at fair value.

gains were included in other comprehensive income in the accompanying condensed statements of operations and comprehensive loss.

the maturity and settlement of these investments, realized gains were recorded as a component of interest income on the accompanying condensed

statement of operations and comprehensive loss.

Concentration of Credit Risk in the Financial

Service Industry

As of September 30, 2023, the Company had cash

As of December 31, 2023, the Company had cash

deposited in certain financial institutions in excess of federally insured levels.

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market corroboration, for substantially the full term of the financial instrument.

Level 3 Inputs are unobservable inputs based

on our assumptions.

Level 3 – Inputs are unobservable inputs

based on our assumptions.

The Company’s financial instruments include

cash, accounts payable, the carrying value of the operating lease liabilities, notes payable and other derivative liabilities (see Note

amounts of cash and accounts payable approximate their fair value, due to the short-term nature of these items.

The carrying amounts of

notes payable and operating lease liabilities approximate their fair values since they bear interest at rates which approximate market

rates for similar debt instruments.

The carrying amounts of cash and accounts payable approximate their fair value, due to the short-term nature of these items.

amounts of notes payable and operating lease liabilities approximate their fair values since they bear interest at rates which approximate

market rates for similar debt instruments.

Investments in U.S.

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treasury bills held

Amortized Cost

Gross Unrealized

Total Accumulated

Comprehensive

Treasury Bills due is 3 - 6 months

During the fiscal year ended June 30, 2023, the Company purchased a

total of approximately $ 46 million of U.S.

Treasury Bills during the year ended June 30, 2023.

Amortized Cost Basis

Gross Unrealized Gain

Total Accumulated Other Comprehensive Income

Treasury Bills due in 3 - 6 months

During the fiscal year ended June 30, 2023, the

Company purchased a total of approximately $ 46 million of U.S.

Treasury Bills.

All outstanding investments in U.S.

Bills available for sale held at June 30, 2023 matured during the three months ended September 30, 2023 and were settled, resulting in

a realized gain of $ 223,865 recorded as a component of interest income on the accompanying condensed statement of operations and comprehensive loss.

Treasury Bills available

for sale held at June 30, 2023 matured during the three months ended September 30, 2023 and were settled, resulting in a realized gain

of $ 223,865 recorded as a component of interest income on the accompanying condensed statement of operations and comprehensive loss.

Intangible Assets

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Schedule of intangible assets

September 30, 2023

December 31, 2023

June 30, 2023

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Amortization expense was $ 57,344 in each of the

three-month periods ended September 30, 2023 and 2022.

The Company amortizes intellectual property over the expected, original useful

lives of 10 years.

three-month periods ended December 31, 2023 and 2022.

Amortization expense was $ 114,688 in each of the six-month periods ended December

31, 2023 and 2022.The Company amortizes intellectual property over the expected, original useful lives of 10 years.

Estimated future amortization expense is as follows:

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The warrant has a down round

feature that reduces the exercise price of the warrant if the Company sells stock at a price lower than the exercise price of the warrant.

On August 15, 2022, the Company received net proceeds of approximately $5.9 million, net of costs of approximately $94,000, and entered

into an amended and restated registration agreement with Acuitas, which amended and restated that certain registration rights agreement,

dated as of June 10, 2021, by and between the Company and Acuitas (the “Existing Registration Rights Agreement”), to amend

the definition of “Registrable Securities” in the Existing Registration Rights Agreement to include the PIPE Shares and the

PIPE Warrant Shares as Registrable Securities thereunder.

feature that reduces the exercise price of the warrant if the Company sells stock at a price lower than the initial exercise price of

On August 15, 2022, the Company received net proceeds of approximately $5.9 million, net of costs of approximately $94,000,

and entered into an amended and restated registration agreement with Acuitas, which amended and restated that certain registration rights

agreement, dated as of June 10, 2021, by and between the Company and Acuitas (the “Existing Registration Rights Agreement”),

to amend the definition of “Registrable Securities” in the Existing Registration Rights Agreement to include the PIPE Shares

and the PIPE Warrant Shares as Registrable Securities thereunder.

Other Liabilities

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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 prime rate at September 30, 2023 was 8.50 % .

The prime rate at December 31, 2023 was 8.50 % .

The Loan is secured by a lien upon and security interest in all of the Company’s

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The total interest

expense of approximately $ 1 million for the three months ended September 30, 2023, was recognized in the accompanying condensed statements

of operations and comprehensive loss and included the interest only payments totaling approximately $ 525,000 , the amortization of financing costs of approximately

$ 38,000 , unearned discount of approximately $ 356,000 and the accretion of loan premium of approximately $ 82,000 .

expense of approximately $ 682,000 for the three months ended December 31, 2023, was recognized in the accompanying condensed statements

of operations and comprehensive loss and included the interest only payments totaling approximately $ 429,000 , the amortization of financing

costs of approximately $ 31,000 , unearned discount of approximately $ 289,000 and the accretion of loan premium of approximately $ 67,000 .

The total interest expense of approximately $ 1.5 million for the six months ended December 31, 2023, was recognized in the accompanying

condensed statements of operations and comprehensive loss and included the interest only payments totaling approximately $ 955,000 , the

amortization of financing costs of approximately $ 69,000 , accretion of unearned discount of approximately $ 645,000 and the accretion of

loan premium of approximately $ 149,000 .

The total interest expense of approximately $ 1.1

million for the three months ended September 30, 2022;

was recognized in the accompanying condensed statements of operations and comprehensive loss and included

the interest payments totaling approximately $ 470,000 , the amortization of financing costs of approximately $ 43,000 , unearned discount

of approximately $ 400,000 and the accretion of loan premium totaled of approximately $ 144,000 .

As of September 30, 2023, the remaining principal

million for the three months ended December 31, 2022, was recognized in the accompanying condensed statements of operations and included

the interest only payments totaling approximately $ 518,000 , the amortization of financing costs of approximately $ 43,000 , unearned discount

of approximately $ 400,000 and the accretion of loan premium of approximately $ 93,000 .

The total interest expense of approximately $ 2.1

million for the six- months ended December 31, 2022, was recognized in the accompanying condensed statements of operations and included

interest only payments totaling approximately $ 987,000 , the amortization of financing costs of approximately $ 85,000 , unearned discount

of approximately $ 801,000 and the accretion of loan premium of approximately $ 237,000 .

As of December 31, 2023, the remaining principal

balance of $10 million under the Loan is payable in 12 monthly equal installments.

For the three months ended September 30, 2023, the

Company paid back $2.5 million of the original loan of $15 million.

The following is a summary of the Notes Payable as of September 30,

For the three and six months ended December 31, 2023,

the Company paid back $2.5 million and $5 million respectively, of the original loan of $15 million.

The following is a summary of the Notes Payable as of December 31,

2023 and June 30, 2023:

1 unchanged sentence

Schedule of note payable

September 30, 2023

December 31, 2023

June 30, 2023

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Non-current portion of Notes Payable

September 30, 2023

December 31, 2023

June 30, 2023

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Notes Payable, net of the current portion financing costs, unearned premiums and discount

Estimated future amortization expense and accretion of premium is as

Estimated future amortization expense and accretion of premium and

discount is as follows:

Schedule of estimated future amortization expense and accretion of premium

Unearned Discount

Debt Financing

Loan accretion

Debt Financing Costs

Loan accretion Premium

Year ending June 30, 2024 (Remaining 6 months)

Fair Value Measurements

At September 30, 2023 and June 30, 2023, the estimated

At December 31, 2023 and June 30, 2023, the estimated

fair value of derivative liabilities measured on a recurring basis are as follows:

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Fair Value Measurements at

September 30, 2023

December 31, 2023

Derivative liability - Warrants

Derivative liability - Conversion option on notes payable

Derivative liability - Conversion option on note payable

Total derivatives

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The following table presents the activity for

liabilities measured at fair value using unobservable inputs for the three months ended September 30, 2023:

liabilities measured at fair value using unobservable inputs for the six months ended December 31, 2023:

Fair value, liabilities measured on recurring basis

Derivative liabilities

Derivative liability -

Conversion Option

on Convertible

Derivative liabilities - Warrants

Derivative liability - Conversion Option on Convertible Debenture

Balance at June 30, 2023

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Transfer in and/or out of Level 3

Balance at September 30, 2023

Balance at December 31, 2023

The following table presents the activity for

liabilities measured at fair value using unobservable inputs for the three months ended September 30, 2022:

Derivative liabilities

Derivative liability -

Conversion Option

on Convertible

liabilities measured at fair value using unobservable inputs for the six months ended December 31, 2022:

Derivative liabilities - Warrants

Derivative liability - Conversion Option on Convertible Debenture

Balance at June 30, 2022

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Transfer in and/or out of Level 3

Balance at September 30, 2022

Balance at December 31, 2022

The fair values of derivative liabilities for

the Avenue Warrants and the conversion option at September 30, 2023 in the accompanying condensed balance sheet, were approximately $622,000

the Avenue Warrants and the conversion option of the Note at December 31, 2023 in the accompanying condensed balance sheet, were approximately

$123,000 and approximately $7,000, respectively.

The total change in the fair value of the derivative liabilities totaled approximately

for the three months ended September 30, 2023;

and accordingly, was recorded in the accompanying condensed statement of operations and comprehensive loss.

assumptions used in the Black Scholes model to value the derivative liabilities at September 30, 2023 included the closing stock price

of $ 3.41 per share;

for the Avenue Warrants, the exercise price of $ 5.82 , remaining term 3.2 years, risk free rate of 4.8 % and volatility

and for the embedded derivative liability of the conversion option, the conversion price of $ 6.98 ;

remaining term 1.17 years,

risk free rate of 5.39 % and volatility of 93.0 % .

$983,000 and $1.7 million for the three and six months ended December 31, 2023, respectively;

and accordingly, was recorded in the accompanying

condensed statement of operations and comprehensive loss.

The assumptions used in the Black Scholes model to value the derivative liabilities

at December 31, 2023 included the closing stock price of $ 1.26 per share;

for the Avenue Warrants, the exercise price of $ 5.82 , remaining

term 2.9 years, risk free rate of 4.0 % and volatility of 93.0 % ;

and for the embedded derivative liability of the conversion option, the

conversion price of $ 6.98 ;

remaining term 0.92 years, risk free rate of 4.87 % and volatility of 84.0 % .

Derivative liability – Avenue Warrants

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The Avenue Warrants 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 condensed balance sheet at September 30, 2023.

liability at fair value in the accompany condensed balance sheet at December 31, 2023 and June 30, 2023.

The Black Scholes model was used to calculate

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The Avenue Warrants

are recorded at their fair values at the date of issuance and remeasured at September 30, 2023.

are recorded at their fair values at the date of issuance and remeasured at December 31, 2023 and June 30, 2023.

Embedded derivative liability – Conversion

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Financial assets

As of September 30, 2023, investments in U.S.

Treasury Bills were valued through use of quoted prices and are classified as Level 1.

As of December 31, 2023, investments in U.S.

Bills were valued through use of quoted prices and are classified as Level 1.

The following table presents information about

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Fair Value Measurements at

September 30, 2023

December 31, 2023

Treasury Bills due in 3 months or less at purchase

Treasury Bills due in 3 - 6 months at purchase

Fair Value Measurements at

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Riley Securities, Inc.’s role as a sales agent under the Sales Agreement.

the three months ended September 30, 2023, the Company sold 432,201 shares of common stock under the Sales Agreement for total net proceeds

the three months ended December 31, 2023, the Company sold 2,900,902 shares of common stock under the Sales Agreement for total net proceeds

of $ 7.4 million after 3 % commissions and expenses of approximately $ 258,000 .

During the three months ended September 30, 2022, the Company

During the six months ended December 31, 2023, the Company

sold 3,333,103 shares of common stock under the Sales Agreement for total net proceeds of $ 9.3 million after 3 % commissions and expenses

of approximately $ 377,000 .

During the three months ended December 31, 2022,

the Company sold 4,312,741 shares of common stock under the Sales Agreement for total net proceeds of $ 32.5 million after 3 % commissions

and expenses of approximately $ 1.2 million.

During the six months ended December 31, 2022, the Company sold 5,857,613 shares of common

stock under the Sales Agreement for total net proceeds of $ 38.4 million after 3 % commissions and expenses of approximately $ 1.6 million.

Stock Options

The following table summarizes the activity relating

to the Company’s stock options for the three months ended September 30, 2023:

to the Company’s stock options for the six months ended December 31, 2023:

Schedule of summarizes the activity relating to the Company’s stock options

Weighted-Average Exercise Price

Weighted Remaining Average Contractual Term

Aggregate Intrinsic Value

Outstanding at June 30, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Options Expired

Options Canceled

Outstanding at December 31, 2023

Exercisable at December 31, 2023

The fair value of each option grant on the date

of grant is estimated using the Black-Scholes option.

No stock options were issued, expired, canceled or exercised during the three months ended September 30, 2023.

of grant is estimated using the Black-Scholes option pricing model.

The pricing model reflects the following weighted-average assumptions

for the six months ended December 31, 2023 and 2022:

Schedule of assumptions used

December 31, 2023

June 30, 2023

Expected life of options (In years)

Expected volatility

Risk free interest rate

Dividend Yield

The total stock option-based compensation expense

for three-months ended September 30, 2023 and 2022 was of $ 808,027 and $ 878,640 , respectively.

Issuance of restricted stock units and options :

for three-months ended December 31, 2023 and 2022 was of $ 619,701 and $ 1,712,787 , respectively.

The total stock option-based compensation expense

for six-months ended December 31, 2023 and 2022 was of $ 1,427,728 and $ 2,591,427 , respectively.

Issuance and modification of restricted stock units and options:

On November 23, 2022, the Company issued equity

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Four directors received restricted stick units (“RSUs”) to purchase

a total of 155,636 shares of common stock at the grant date fair value of $ 6.12 per share, a total cost of $ 952,492 recognized as stock

compensation in the three months ended December 31, 2022.

a total of 155,636 shares of common stock at the grant date fair value of $ 6.12 per share, a total cost of $ 952,492 was recognized as

stock compensation in the three months ended December 31, 2022.

Three directors received stock options to purchase 195,000 shares of common

stock at an exercise price of $ 6.12 per share, the grant date fair value.

The total stock compensation cost of stock options of $ 791,700

was recognized in the three months ended December 31, 2022.

The equity awards vest every three months beginning from the last annual shareholders’

meeting on November 9, 2022, on February 9, 2023, May 9, 2023, August 9, 2023 and earlier of November 9, 2023 or the next annual shareholders’

While the agreements contain certain contractual vesting terms, there are circumstances where the vesting can be accelerated

that is not within the Company’s control and as a result, for accounting purposes, the awards are assumed to have been fully vested

on the grant date, accordingly, the Company recognized the total compensation cost of $ 1,744,192 on November 23, 2022.

On August 9, 2023,

the Company delivered the vested portion and issued 38,730 shares of common stock.

stock at an exercise price of $ 6.12 per share.

The total stock compensation cost of these stock options of $ 791,700 was recognized as

stock compensation in the three months ended December 31, 2022.

The equity awards vest quarterly over the annual service period from November

9, 2023 to the next annual shareholders’ meeting.

While the agreements contain certain contractual vesting terms, there are circumstances

where the vesting can be accelerated that is not within the Company’s control and as a result, for accounting purposes, the awards

are assumed to have been fully vested on the grant date, accordingly, the Company recognized the total compensation cost of $ 1,744,192

on November 23, 2022.

On November 9, 2023, the Company issued equity

awards for the board of directors’ annual compensation.

Four directors received restricted stick units (“RSUs”) to purchase

a total of 182,696 shares of common stock at the grant date fair value of $ 3.01 per share, a total cost of $ 77,905 was recognized as stock

compensation in the three months ended December 31, 2023.

Two directors received stock options to purchase 183,250 shares of common stock

at an exercise price of $ 3.01 per share.

The total stock compensation cost related to these stock options of $ 34,466 was recognized in

the three months ended December 31, 2023.

The equity awards vest quarterly over the annual service period from November 9, 2023, on February

9, 2024, May 9, 2024, August 9, 2024 and earlier of November 9, 2024 or the next annual shareholders’ meeting.

In December 2023, the Company terminated five

employees and as part of their severance agreement modified their equity awards that had been granted pursuant to the 2019 Omnibus Plan.

The modifications included the acceleration of certain tranche vesting of stock option awards to purchase a total of 56,233 shares of

common stock (“Accelerated Options”), effective on the December Separation Date, as defined in severance agreement (“Separation

and extended the expiration date for one year from the Separation Date for both the Accelerated Options and any vested and

unexercised stock options held by the terminated employees as of the Separation Date.

Accordingly, the Company remeasured the modified

awards based on the stock price of $1.54 per share at the close on the Separation Date and a one-year life.

The net adjustment for both

stock option modifications was a net credit of $127,199 and was recognized as adjustment to stock compensation expense for the three months

ended December 31, 2023.

The modification also included the acceleration

of an additional tranche vesting of 10,302 Restricted Stock Units, (“RSUs”) as of the Separation date.

The modified RSUs were

remeasured based on the stock price of $1.54 per share at close on the Separation Date and totaled $15,865, representing an additional

in stock-based compensation for the three months ended December 31, 2023.

The Company canceled 171,556 unvested stock options and 10,303

unvested RSUs.

The following table summarizes vesting of restricted

common stock:

Schedule of vesting of restricted common stock

Number of Shares

Weighted Average Grant Date Fair Value Per Share

Unvested at June 30, 2023

Unvested at September 30, 2023

Unvested at December 31, 2023

The total stock based compensation – restricted

stock expense for three-months ended September 30, 2023 and 2022 was of $ 380,834 and $ 17,537 , respectively.

stock expense for the three-months ended December 31, 2023 and 2022 was of $ 303,173 and $ 1,554,453 , respectively.

The total stock based

compensation – restricted stock expense for the six-months ended December 31, 2023 and 2022 was $ 684,007 and $ 1,571,990 , respectively.

There were 147,508 RSU that vested on November

23, 2023 and the related shares of common stock will issued and delivered by March 15, 2024.

Issuance of Stock Options under the 2019 Omnibus Plan.

6 unchanged sentences

Stock Warrants

The following table summarizes warrant activity during the three months

ended September 30, 2023:

The following table summarizes warrant activity during the six months

ended December 31, 2023:

Summary of warrants activity

Number of Shares

Weighted Average Exercise Price

Weighted Average Remaining Life (Years)

Aggregate Intrinsic Value

Outstanding and exercisable at June 30, 2023

Outstanding and exercisable at September 30, 2023

Outstanding and exercisable at December 31, 2023

Of the above warrants, 101,380 expire in the fiscal

year ending June 30, 2025, 35,175 expire in the fiscal year ending June 30, 2026, and 7,633,730 expire in the fiscal year ending June

No warrants were granted, expired, or were exercised during the three months ended September 30, 2023.

No warrants were granted, expired, or were exercised during the three and six months ended December 31, 2023.

The Company pays an annual rent of $2,200 for

8 unchanged sentences

Total operating lease

expense of approximately $ 13,000 and $ 13,000 for the three months ended September 30, 2023 and 2022, respectively;

were included in the

accompanying condensed statements of operations and comprehensive loss as a component of selling, general and administrative expenses.

expense of approximately $ 13,000 and $ 13,000 for the three months ended December 31, 2023 and 2022, respectively and $ 26,000 and $ 26,000

for the six months ended December 31, 2023 and 2022, respectively;

were included in the accompanying condensed statements of operations

and comprehensive loss as a component of selling, general and administrative expenses.

The right-of-use asset,

1 unchanged sentence

Schedule of deferred tax assets

September 30, 2023

December 31, 2023

June 30, 2023

3 unchanged sentences

Total operating lease liabilities

At September 30, 2023, the future estimated minimum lease payments

under non-cancelable operating leases are as follows:

At December 31, 2023, the future estimated minimum lease payments under

non-cancelable operating leases are as follows:

Schedule of future estimated minimum lease payments under non-cancelable operating leases

6 unchanged sentences

Total cash paid for amounts included in the measurement of lease liabilities

were $ 12,900 and $ 12,525 for the three months ended September 30, 2023 and 2022, respectively.

were $ 25,800 and $ 25,050 for the six months ended December 31, 2023 and 2022, respectively.

The weighted average remaining lease term and

discount rate as of September 30, 2023 and June 30, 2023 were as follows:

discount rate as of December 31, 2023 and June 30, 2023 were as follows:

Schedule of weighted average remaining lease term and discount rate

September 30, 2023

December 31, 2023

June 30, 2023

14 unchanged sentences

at a maximum of $200,000 per year.

Shareholder class action complaint

On January 19, 2024, a purported shareholder class

action complaint, captioned Eric Olmstead v.

3:24-cv-00035, was filed in the U.S.

District Court for the

District of Nevada, naming Company and certain of its officers and/or directors as defendants.

The lawsuit alleges that the Company made

material misrepresentations and/or omissions of material fact relating to the Company’s business, operations, compliance, and prospects,

including information related to the study and trial of NE3107, in violation of Sections 10(b) and

20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.

The class action is on behalf of purchasers

of the Company’s securities during the period from August 5, 2021 through November 29, 2023 and seeks unspecified monetary damages

on behalf of the putative class and an award of costs and expenses, including attorney’s fees.

The Company believes the lawsuit is without merit

and intends to defend the case vigorously.

At this early stage of the proceedings, the Company is unable to make any prediction regarding

the outcome of the litigation.

No adjustment or accruals have been reflected in the accompanying condensed financial statements.

Employee Benefit Plan

5 unchanged sentences

will match 5% of the first 5% of an employee’s contributions to the 401K Plan., The Company made contributions of approximately

$ 30,900 and $ 45,500 , for the three months ended September 30, 2023 and 2022, respectively.

Subsequent Events

Subsequent to September 30, 2023, the Company sold 819,935 shares of common

stock for net proceeds of $ 3.5 million net of 3% commission and expenses totaling approximately $ 105,000 under the Sales Agreement with

$ 20,500 and $ 19,000 ,

for the three months ended December 31, 2023 and 2022, respectively.

The Company made contributions of approximately $ 51,400

and $ 64,200 , for the six

months ended December 31, 2023 and 2022, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements