PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BioVie Inc.

Condensed Balance Sheets

See accompanying notes to unaudited condensed financial statements

BioVie Inc.

Condensed Statements of Operations

(Unaudited)

See accompanying notes to unaudited condensed financial statements

BioVie Inc.

Condensed Statements of Cash Flows

(Unaudited)

See accompanying notes to unaudited condensed financial statements

BioVie Inc.

Condensed Statements of Changes in Stockholders’ (Deficit) Equity

For the Three Months Ended September 30, 20192021 and September 30, 2020

(Unaudited)

See accompanying notes to unaudited condensed financial statements

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 20202021 and 20192020

(unaudited)

BioVie Inc. (the “Company” or “we” or “our”) is a clinical-stage company pursuing the discovery, development, and commercialization ofdeveloping innovative drug therapies. We are currently focused on developingtherapies to treat chronic debilitating conditions including liver disease and commercializingneurological and neuro-degenerative disorders and certain cancers.

In liver disease, our Orphan Drug candidate BIV201 (continuous infusion terlipressin), is being developed as a novel approachfuture 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 the treatment of ascites due to chronic liver cirrhosis. Our therapy BIV201 is based on a12 months. The US Food and Drug Administration (FDA) has not approved any drug that is approved in about 40 countries to treat related complications of liver cirrhosis (part of the same disease pathway as ascites), but not yet available in the United States. BIV201’s active agent is a potent vasoconstrictor and has shown efficacy for reducing portal hypertension in studies around the world. The goal is for BIV201 to interrupt the ascites disease pathway, thereby halting the cycle of accelerating fluid generation in ascites patients.

 BioVie completed arefractory 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 October 31, 2021, the nine planned US study centers have been activated and are actively screening patients, with refractory ascites dueand multiple patients have been enrolled in the study. The FDA has communicated to advanced liver cirrhosis at the McGuire Research Institute in Richmond, VA in 2019. The Company announced top-line results and met with representatives of the FDA for a Type C Guidance Meeting to discuss the study results and plan our next clinical study. In September 2019, we requested a Type B Meeting and subsequently submitted an extensive pre-meeting information package. In April 2020, the FDA provided a written responseus that provided new guidance regarding primary and secondary endpoints, BIV201 dosing levels, quality of life measures and other key aspects of the clinical trial design. The Agency subsequently answered follow-up questions enabling the Company to complete the Phase 2 clinical trial protocol. Thepending positive Phase 2 study willresults, a sufficiently large and well-controlled Phase 3 trial, with supportive trend data from the Phase 2b (statistical significance not required), could potentially yield the clinical data needed to apply for BIV201 marketing approval. The Phase 2b clinical trial protocol is summarized on www.clinicaltrials.gov, trial identifier NCT04112199.at nine US study centers. (NCT04112199). Top-line results from this trial are expected in mid-2022, to be used to guide the design offollowed by a proposed single pivotal Phase 3 clinical trial. We have developedtrial beginning in late 2022. In June 2021, BioVie received written feedback from the FDA in response to a patent-pending novel liquid formulation of terlipressin for use in this study that is intendedType B meeting request to improve convenience for outpatient administration and avoid potential formulation errors that may occur when pharmacists reconstitute the powder version.

BIV201 has the potential to improve the health of thousands of patients suffering from life-threatening complications of liver cirrhosis due to hepatitis, nonalcoholic steatohepatitis (NASH), and alcoholism. It has FDA Fast-Track status and Orphan Drug designation for the most common of these complications, ascites, which representsconduct a significant unmet medical need. An Orphan drug that is first-to-market typically receives 7 years of market exclusivity in the United States for the designated use(s). The FDA has never approved any drug specifically for treating ascites. In addition, the Company has a pending patent application directed to proprietary liquid formulations of terlipressin for use in its planned Phase 2 andpivotal US Phase 3 clinical trials, subjecttrial in HRS-AKI, which is a life-threatening complication of advanced ascites. Based on the guidance received in subsequent communications with the FDA, we are revising certain elements of our proposed study and are planning to FDA clearance, which could eventually provide up to 20 years of patent coverageinitiate this study in each country in which the Company seeks patent protection according to the patent laws of the issuing country.early 2022.

The BIV201 development program began atwas 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 Company and PharmaIN, Corp.Barrett Edge, Inc.

In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc. (“PharmaIN”NeurMedix”), LAT Pharma’s former partner focuseda 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 modified drug candidatesmedical 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 late calendar year 2022.

In September 2021, the FDA authorized the Company to initiate 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) is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD) participants treated with carbidopa/levodopa and NE3107. Forty patients with a defined L-dopa “off state” will be randomized 1:1 placebo: 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. This study is planned to start in early 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 same therapeutic field but not including BIV201, had agreed to pay royalties equal to less than 1% of future net sales of each company's ascites drug development programs,coming months using NE3107 or if such programrelated compounds acquired in the NeurMedix asset purchase. NE3107 is licensed to a third party, less than 5% of each company's net license revenues. On December 24, 2018,patented in the Company returned its partial ownership rights to the PharmaIN modified terlipressin development programUnited States, Australia, Canada, Europe and simultaneously paid the remaining balance due on a related debt. PharmaIN, Corp.’s rights to our program remain unchanged.

On September 22, 2020, the Company closed a registered public offering (the “Offering”) issuing 1,799,980 of its Class A common stock, par value $0.0001 per share (the “Common Stock”) at $10 per share, resulting in net proceeds to the Company of approximately $15.6 million, net of issuance costs of approximately $2.4 million; and of which approximately $1.8 million was used to satisfy all amounts owing in respect of a 10% OID Convertible Delayed Draw Debenture (the “Debenture”) due September 24, 2020 held by the Company’s controlling stockholder, Acuitas Group Holdings, LLC (“Acuitas”).

South Korea.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

On September 17, 2020,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 common stock was approvedproducts, 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, listing onCompany 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 NASDAQ Capital Market (“Nasdaq”) under the symbol “BIVI” and began trading on September 18, 2020.

At September 30, 2020, the Company had working capital of approximately $13.1 million and cash of $13.2 million and, stockholders’ equity was approximately $14.6 million and its accumulated deficit was approximately $87 million. As a development stage enterprise, the Company expects substantial losses in future periods. These unaudited interim condensedCompany’s financial statements werehave 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. BasedAs of September 30, 2021, the Company had working capital of approximately $19.3 million, cash of approximately $20.5 million, stockholders’ equity of approximately $20.2 million, and an accumulated deficit of approximately $230.4 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 plans, management believes it has sufficient fundsongoing development and commercialization efforts, as well as its ability to fundsecure 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 operations through our next roundability to raise additional capital to finance its operations. Management expects that future sources of clinical trials through at least November 2021.funding may include sales of equity, obtaining loans, or other strategic transactions.

The emergence of widespread health emergencies or pandemics ofsuch as the coronavirus ("Covid-19"(“COVID-19”) pandemic (and its related variants), may lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability, including theinstability. Although some jurisdictions have relaxed these measures, others have not or have reinstated them as COVID-19 cases surge and variants emerge. The duration and spread of the outbreak and restrictionsCOVID-19 pandemic and the long-term impact of Covid-19COVID-19 and its variants on the financial markets and the overall economy all of which are highly uncertain and cannot be predicted.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.

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.

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, 20202021 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 and information included under the heading: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, 20202021 and 20192020 in our Annual Report on formForm 10-K filed with Securities Exchange Commission (“SEC”) on August 6, 2020, and as amended by Amendment No. 1 on Form 10-K/A and filed with the SEC on August 7, 2020.30, 2021. For a summary of significant accounting policies, see the Company’s Annual Report on Form 10K10-K for the fiscal year ended June 30, 20202021, filed with the SEC on August 6, 2020, and as amended by Amendment No. 1 on Form 10-K/A and filed with the SEC on August 7, 2020.

Loan Pursuant to Paycheck Protection Program

The Company received $62,500 in loan proceeds pursuant to the Paycheck Protection Program (“PPP”), under the Coronavirus Aid Relief and Economic Security (CARES) Act. The PPP Loan is evidenced by a loan application and payment agreement by and between the Company and Lender. The Company applied for the loan in May 2020 and received funding for its maximum amount of $62,500 on May 21, 2020. The term of the loan is for 60 months and matures on the fifth year anniversary from the date of funding. It bears interest at an annual rate of 1%. The PPP loan is subject to 100% forgiveness. Currently, the application process to apply forgiveness occurs 24 weeks after the funding date. The Company intends to file the application for forgiveness, accordingly, unless the pending outcome of a new ruling is approved that forgives all the PPP loans under $160,000. There can be no assurance that such forgiveness will occur. The Company is accounting for the loan as debt and if forgiveness is granted the Company will recognize a gain on extinguishment.

30, 2021.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

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 sharesstockholders 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. Due to the net loss forFor the three months ended September 30, 20192021 and 2020, such amounts were excluded from the diluted loss since their effect was considered anti-dilutive.anti-dilutive due to the net loss for the period.

The table below shows the number of outstanding stock options and warrants as of September 30, 20202021 and 2019:2020:

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

Recent accounting pronouncementsAccounting Pronouncements

The Company considers the applicability and impact of all Accounting StandardStandards Updates (“ASU’s”). ASU’s not discussed belowThere were assessed and determined to be either not applicable orno recent ASUs that are expected to have minimala material impact on ourthe Company’s balance sheets or statementstatements of operations.

In August 2018, the FASB issued ASU 2018-13, “Fair value measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. This ASU was adopted as of July 1, 2020. There has been no impact to its condensed financial statements and related disclosures.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

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 September 30, 20202021 and June 30, 2020:2021:

Amortization expense forwas $57,344 in each of the three-month periodperiods ended September 30, 20202021 and 2019 was $57,344 and $57,344 respectively.2020. 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

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.

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.

Equity Transactions with Acuitas

On September 22, 2020, concurrent with the closing of the Company’s Offering, approximately $1.8 million was paid to Acuitas satisfying all amounts owed on the Debenture due September 24, 2020 held by the Company’s controlling stockholder, Acuitas.

Additionally, in connection with the close of the public offering on September 22, 2020, the Company issued an aggregate of 6,909,582 shares of Common Stock to Acuitas, representing (i) 5.4 million shares issuable pursuant to Acuitas’ rights under the Purchase Agreement dated July 3, 2018, as amended on June 24, 2019 and October 9, 2019; and the various extension letters as more fully described below; and was recorded asletters; which resulted in a deemed dividend at the close of the public offering at price of $10/$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 three monthsyear ended SeptemberJune 30, 2020,2021, the Company received additional draws under the Debenture totaling $436,000. The total draws as of September 22, 2020 were $1.7 million and the related total number of warrants issuable at $4.00 per share of common stock was 424,750 of which 328,250 warrants had been issued. In accordance with the Debenture agreements, as more fully described below; at September 22, 2020 upon the Company’s close of its public offering, al1all the warrants issued related to the debenture totaling 1,453,250 were mandatorily redeemed along with the additional 96,500 shares common stock issued to Acuitas.

The following paragraphs summarize the background of those financings and arrangements which were settled and redeemed on September 22, 2020.

BIOVIE INC.

Notes to Condensed Financial Statements

ForOther liabilities represent retention bonus arrangements with certain employees. Retention bonuses of $1,161,000 were expensed in the Three Months Endedaccompanying statements of operations for three months ended September 30, 20202021, and 2019will be paid in equal monthly installments, which began in August 2021, over a 24-month period.

(unaudited)

On July 3, 2018, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Acuitas and certain other purchasers identified inStock Options

The following table summarizes the Purchase Agreement (together with Acuitas, the “Purchasers”) pursuant to which (i) the Purchasers agreed to purchase an aggregate of 2,133,332 shares of the our Series A Convertible Preferred Stock (the “Preferred Stock”) at a price per share of $1.50 per share of Preferred Stock (the “Initial Sale”) and (ii) we agreed to issue warrants (the “Warrants”) to purchase 1,706,666 shares of common stock, each subjectactivity relating to the terms and conditions set forth in the Purchase Agreement, for an aggregate consideration of $3.2 million. We received $160,000 of the $3.2 million in April and May 2018 as prepaid equity. Acuitas also received an additional 6,667 Warrants in connection with the payoff of a note issued by us in favor of Acuitas. The Initial Sale and issuance of the Warrants occurred on July 3, 2018. In addition, Acuitas had the option to purchase up to an additional 1,600,000 shares of commonCompany’s stock at a price per share of $1.88, and warrants on the same terms as the Warrants, within two weeks following the one year anniversary of the closing of the Initial Sale (the “Subsequent Sale”) in the event that we did not obtain $3,000,000 of funding through various non-dilutive grants prior to the one year anniversary of the closing of the Initial Sale, less any federal or FDA grant funding received by the Company. Acuitas is controlled by our Chairman and Chief Executive Officer, Terren Peizer and the Purchasers included Jonathan Adams, James Lang, Cuong Do and Michael Sherman, who are members of our Board.

The Purchase Agreement contained customary representations and warranties. In connection with the disclosure schedule associated with the representations and warranties, we also disclosed customary information, including the following: (i) the existence of the Mallinckrodt petition before the U.S. Patent Trial and Appeal Board, (ii) our capitalization, (iii) our obligation to pay a low single digit royalty on the net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma LLC members, PharmaIN Corporation and The Barrett Edge, Inc. pursuant to the Agreement and Plan of Merger, dated April 11, 2016, by and between LAT Pharma LLC and us, (iv) our obligation to pay a low single digit royalty on net sales of all terlipressin products covered by specified patents up to a maximum of $200,000 per year pursuant to the Technology Transfer Agreement, dated July 25, 2016, by and between us and the University of Padova (Italy), and (v) certain recent issuances of common stock by us.

Each share of Preferred Stock automatically converted into 1 share of common stock upon the filing with the Secretary of State of the State of Nevada of a Certificate of Amendment to our Articles of Incorporation (the “Amendment”) on August 13, 2018 that increased the number of authorized shares of common stock to 800,000,000. The Amendment was approved by the written consent of the holders of more than a majority of our issued and outstanding common stock on July 3, 2018 and was filed with the Secretary of State of the State of Nevada 20 calendar days following the distribution of our Definitive Information Statement on Schedule 14 that was filed with the SEC on July 13, 2018.

Pursuant to a letter agreement dated June 24, 2019, Acuitas agreed to modify its existing rights under the Purchase Agreement so that:

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

Convertible Debenture Transaction with Acuitas

On September 24, 2019, the Company entered into a Securities Purchase Agreement (the “2019 Purchase Agreement”) with Acuitas pursuant to which (i) Acuitas agreed to purchase a 10% OID Convertible Delayed Draw Debenture due September 24, 2020 for an aggregate commitment amount of up to $2.0 million, and (ii) the Company issued 1,125,000 shares (the “Commitment Shares”) of the Company’s common stock and warrants (the “Commitment Warrants”) to purchase an equal number of shares, each subject to the terms and conditions set forth in the 2019 Purchase Agreement. The Debenture accrues additional principal at the rate of 6% per annum and interest at the rate of 10% per annum, is convertible into shares of common stock at $4.00 per share prior to the completion of the company’s planned public offering of units (the “Public Offering”) or, subsequent to the closing of the Public Offering, the lower of $4.00 or 80% of the offering price per unit to the public in the Public Offering and are mandatorily redeemable upon such closing at 100% of the accrued principal amount and unpaid interest to the date of redemption. The Commitment Warrants are five-year warrants, exercisable upon the earlier of the effectiveness of the Company’s current reverse stock split or December 1, 2019, at an amount equal to the lower of $4.00 or 80% of the offering price per unit to the public in the Public Offering. Upon entering into the 2019 Purchase Agreement, the Company drew an initial $500,000 under the Debenture and in accordance with the 2019 Purchase Agreement, Acuitas received an additional 125,000 warrants (the “Bridge Warrants”) having the same terms as the Commitment Warrants.

Any future draws under the Debenture, which may be made from and after October 15, 2019, November 15, 2019 and December 15, 2019 in equal tranches of $500,000 each, will entitle Acuitas to receive additional Bridge Warrants in equal amount upon such funding. In addition, the 2019 Purchase Agreement provides that, should the underwriters in the Public Offering exercise their option to purchase additional securities during the 45 days following closing and the issuance of such securities would result in Acuitas' beneficial ownership (on a fully diluted basis) of shares of common stock being below 60%, Acuitas shall be issued a number of additional shares of common stock and warrants having the same terms as the Commitment Warrants to result in its beneficial ownership (on a fully diluted basis) of shares of common stock equaling 60%.

The issuance of 1,125,000 shares of the Company’s commons stock and warrants to purchase an equal amount number of shares, to its controlling stockholder for the Bridge Financing was accounted for as a deemed dividend due to its related party nature and $17.1 million representing the excess of the fair value of the consideration given for the financing, net of debt discount; was recorded in accumulated deficit for the year ended June 30, 2020, accordingly. A debt discount of $500,000 against the debenture was recorded which will be amortized over the term of the debenture using the effective interest method. The Company recognized amortization of the unearned discountoptions for the three months ended September 30, 2020 and year ended June 30, 2020 of $21,336 and $37,136, respectively.2021:

 The Company received draws under the Debenture that totaled approximately $1.3 million during the year ended June 30, 2020. The total interest expense related to the draws under the Debenture was approximately $99,000 for the year ended June 30, 2020. On April 1, 2020, the Company entered an amendment to modify the payment of accrued interest amounts under the original terms of the Debenture to capitalize all such amounts as would otherwise accrue on the Debenture. On January 4, 2020, payment of $13,487 accrued interest due was paid through the issuance of 4,422 shares of the Company’s common stock. Acuitas and the Company continue to discuss the need and timing for some or all the remaining draws under the Debenture Agreement. Subsequent to the initial $500,000 draw on September 24, 2019, the Company received draws that totaled $813,000 as July 13, 2020, and accordingly; the Company issued additional Bridge Warrants to purchase 203,250 shares of common stock to its controlling stockholder under the terms of the Bridge Financing. Accordingly, on April 16, 2020, the Company recorded the warrants to purchase 125,000 common stock related to the second $500,000 draw under the debenture as a derivative warrant liability as of June 30, 2020. The Company recorded the warrants related to the draws totaling $313,000 to purchase 78,250 common shares as derivative liabilities. 

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

Pursuant to the 2019 Purchase Agreement, Acuitas agreed to further modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that Acuitas’ previous agreement in June 2019 to waive its rights to a 50% adjustment of the purchase price of the Preferred Stock in the July 2018 transaction, the exercise price of the warrants in such transaction and the price per share in a Subsequent Sale in the event of certain reductions in the useful life of our current intellectual property rights, and effectively exercise its rights to purchase securities in a Subsequent Sale pursuant to a “cashless purchase” at an assumed current market price of approximately $11.25 per share, conditioned in each case on the listing of the Company’s common stock on Nasdaq or the raising of $2.0 million in additional funds in the form of another securities offering, in either case not later than November 30, 2019, such that Acuitas will have irrevocably waived its rights to an adjustment in the purchase price of the Preferred Stock in the Initial Sale and the exercise price of the Warrants and the purchase price of per share in the Subsequent Sale upon the issuance by us of an aggregate of 2,679,916 shares of common stock and 2,679,916 warrants having the same terms as the Commitment Warrants to Acuitas, upon the closing of the Public Offering.

Pursuant to an amendment to the 2019 Purchase Agreement dated October 9, 2019, Acuitas agreed to modify its existing rights under the 2019 Purchase Agreement so that:

On July 14, 2020, the Company, entered into a further extension of its letter agreements dated April 8, 2020, that furthered extended its letter agreement dated February 10, 2020 with Acuitas regarding Acuitas’ previous agreement to modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that its June 2019 waiver of its rights to a 50% adjustment of the purchase price applicable to its initial investment in the Company and the exercise price of the warrants received in such transaction and the price per share should it exercise certain rights to purchase additional securities in the event of certain reductions in the useful life of the Company’s intellectual property rights and commitment to purchase such securities upon the closing of the Offering and commitment to purchase such additional securities would remain effective until October 31, 2020, and accordingly Acuitas was entitled to receive an aggregate of 5,359,832 shares of Common Stock at such closing. In addition, the parties agreed that certain draws under the Company’s current bridge financing with Acuitas were to be made based with respect to the Company’s ongoing capital requirements and current market conditions, notwithstanding certain scheduled availability dates set forth in the 10% OID Convertible Delayed Draw Debenture issued in connection therewith. The letter agreement of July 14, 2020 also confirmed the understanding between the Company and Acuitas regarding certain amounts funded to BioVie that were intended as “partial draws” of credit available under the Debenture which, as of July 14, 2020 hereof aggregated $813,000 in aggregate principal amount in additional to amounts initial funded under the Debenture. Accordingly, such “partial draws” accrued additional principal as amounts otherwise funded pursuant to the original schedule of draws included in the Debenture (as modified by the letter agreement between BioVie and Acuitas dated April 1, 2020 regarding the capitalization of interest otherwise payable) and shall entitle Acuitas to receive a pro rata amount of Bridge Warrants.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

On September 22, 2020, concurrent with the closing of the Offering; the warrants related to derivative liabilities were automatically exercised in full and the convertible Debenture was paid off in cash expiring the conversion option. The fair value of each option grant on the derivative liabilities - warrants and derivative liability - conversion option on convertible Debenture prior to redemption at September 22, 2020 was $13.1 million, anddate of grant is estimated using the change inBlack-Scholes option. The pricing model reflects the fair value of $8.3 million from June 30, 2020 was recorded in the accompanying condensed Statements of Operations. At September 22, 2020, the derivative liabilities, both the warrants and expired conversion option totaling $ 13.1 million were then recorded as additional paid in capital upon automatic exercise of the warrants and payoff of the Debenture.

At September 30, 2020 and June 30, 2020, the estimated fair value of derivative liabilities measured on a recurring basis are as follows:

The following table presents the activity for liabilities measured at fair value using unobservable inputsweighted-average assumptions for the three months ended September 30, 2020: 2021:

Derivative liability – Warrants

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 purchase warrants as either equity instruments or derivative liabilities depending on the specific termsoption-based compensation expense of the warrant agreements. Under applicable accounting guidance,$1,926,962 and $0 for three-month periods ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, there was approximately $6.8 million of unrecognized compensation cost related to non-vested stock warrants that are precluded from being indexedoptions granted to the Company’s own stock becauseDirectors and Officers, which is expected to be recognized over a weighted-average period of full-rachet anti-dilution provisions or the adjustments to the strike price due to an occurrence of a future event; are accounted for as derivative financial instruments. The stock warrants issued September 24, 2019 were not considered indexed to the Company’s own stock because of the adjustment to strike price, an occurrence of a future event such as the Company’s pending capital raise. 

approximately 4.7 years.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

The warrants associated with the level 3 liability were issued on September 24, 2019 and were valued using the Black-Scholes-Merton model. The valuation at June 30, 2020 used the following assumptions: stock price of $14, exercise price of $4.00, term of 5 year expiring April 2025, volatility of 76.61%, dividend yield of 0%, and risk-free interest rate of 0.29%.

The valuation at September 22, 2020 of the warrants associated with equity financing prior to their automatic exercise in full used were the following assumptions: stock price of $9.55, exercise price of $4.00, term of 4 year expiring September 2024, volatility of 79.69%, dividend yield of 0%, and risk-free interest rate of 0.21%. (See note 5 “Related Party Transactions”)

Derivative liability – Conversion option in convertible debenture

The Company recognized a derivative liability for the conversion option of the $2 million 10% OID Convertible Delayed Draw Debenture; which may be convertible into shares of common stock at $4.00 per share prior to the completion of an offering or, subsequent to the closing of the offering, the lower of $4.00 or 80% of the offering price per unit to the public in such offering and are mandatorily redeemable upon such closing at 100% of the accrued principal amount and unpaid interest to the date of redemption. The valuation at June 30, 2020 used the following assumptions: stock price of $14, conversion price of $4.00, term of 0.25 year expiring September 2020, volatility of 62.47%, dividend yield of 0%, and risk-free interest rate of 0.16%.

The valuation at September 22, 2020 used the following assumptions: stock price of $9.55, conversion price of $4.00, term of 0.008 year expiring September 2020, volatility of 45.49%, dividend yield of 0%, and risk-free interest rate of 0.01%.

The related Debenture was paid off in cash on September 22, 2020, expiring the conversion option. (See note 5 “Related Party Transactions”)

Stock Options

The following table summarizes the activity relating to the Company’s stock options for the three months ended September 30, 2020:

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

The following is a summary of stock options outstanding and exercisable by exercise price as of September 30, 2020:2021:

Stock Warrants

The following table summarizes the warrantswarrant activity during the three months ended September 30, 2020:2021:

Of the above warrants, 9,391 expire in the fiscal year ending June 30, 2022, 4,815 expire in the fiscal year ending June 30, 2023, 110,4602,714 expire in the fiscal year ending June 30, 2025, and 89,999141,841 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 exerciseDecember 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 the 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 RSUs vested at September 30, 2021, and 21,710 will vest at December 31, 2021. Accordingly, during the three months ended September 30, 2021, 37,049 RSUs vested and 37,049 shares of common were issued to the CEO.

The Company recorded stock-based compensation expense related to these RSUs of $286,759 and $0 for three- month periods ended September 30, 2021 and 2020, respectively.

Issuance of Stock Options

On July 28, 2020,August 20, 2021, the Company issued 2,210 shares of common stock pursuant to a cashless exercise ofgranted, under the 2019 Omnibus Plan, stock options to purchase 3,200 shares at an average exercise price of $4.76 per share.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

Issuance of warrants

On July 13, 2020, the Company issued Warrants to purchase 203,250 shares of common stock to its controlling stockholder under the terms of the Bridge Financing. The warrants were exercisable at an exercise price of $4 at any time from the date of issuance until 5 years from the date of issuance. (See Note 5 Related Party Transactions.)

On September 22, 2020, the Company issued warrants to purchase 89,9981,365,835 shares of common stock to the underwritersexecutive management team. Twenty percent (20%) of the Offering in connection withshares underlying the closeoptions 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 Offeringgrant date. The option price per share is $7.74 per share, the grant date fair value, and the options terminate on the tenth anniversary of registered Commonthe grant date.

Forfeiture of Stock The warrants are exercisable atOptions

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 exercise priceindependent director of $12.50 at any time from date of issuance until 5 years from the date of issuance.board.

Office Lease 

On

From July 1, 2019 to October 31, 2021, the Company’sCompany paid monthly rent of $1,000 to Acuitas for its headquarter office moved with Acuitas’ new offices toat 2120 Colorado Avenue SteSuite 230, Santa Monica, CA 90404. There is noEffective November 1, 2021, the Company relocated its headquarters to Nevada at 9120 Double Diamond Parkway, Suite 1400, Reno Nevada 89521.

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 for the new premises and the Company continues to accruerequires monthly lease payments of $1,000 for the new office under the terms of the previous month-to-month lease for the previous premises which may be cancelled upon 30 days’ written notice.$8,782.

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”). Inter Partes Review is a trial proceeding conducted with the USPTO Patent Trial and Appeal Board (PTAB) to review the patentability of one or more claims of a patent. Such review is limited to grounds of novelty and obviousness on the basis of prior art consisting of patents and printed publications.

On November 13, 2019, the Patent Trial and Appeal Board of the United States Patent and Trademark Office (the “Board”)USPTO issued a written decision in the inter partes review (“IPR”) action thatIPR from which no appeal was brought by Mallinckrodt Pharmaceuticals Ireland Limited (“Mallinckrodt”) against BioVie Inc. (“BioVie” or “Company”). In that action, Mallinckrodt sought to invalidate BioVie’s patent (U.S. Pat. No. 9,655,945, “Treatmenttaken. The decision revoked all of Ascites”) (the “’945 Patent”). In its decision, the Board determined that all claims of the ‘945 Patent were not patentable because they were either anticipatedpatent as lacking novelty or obvious in light of prior art. The Board also denied BioVie’s Motion to Amend the claims on similar grounds. The result of the Board’s decision is that the ‘945 patent is no longer valid or enforceable. Acuitas Group Holdings, LLC was aware of this patent challenge when it purchased a majority ownership interest in the company in July 2018.as obvious.

This ruling is unrelated to the Company’s Company’s Orphan drug designations for ascites and hepatorenal syndrome (“HRS”), which remain unchanged. An Orphan drug that is first-to-market typically receives 7 years of market exclusivity in the United States for the designated use(s). In addition, the ruling does not affect the Company’s rights in its pending patent application directed to proprietary liquid formulations of terlipressin for use in its planned Phase 2 and Phase 3 trials, subject to FDA clearance,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 country. 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.

BIOVIE INC.

Notes to Condensed Financial Statements

For the Three Months Ended September 30, 2020 and 2019

(unaudited)

The Company and PharmaIN Corporation, LAT Pharma’s former partner focused on the development of new modified drug candidates in the same therapeutic field but not including BIV201 had agreed to pay royalties equal to less than 1% of future net sales of each company's ascites drug development programs, or if such program is licensed to a third party, less than 5% of each company's net license revenues. Onand on December 24, 2018, the Company returned its partial ownership rights to the PharmaIN modified terlipressin development program and simultaneously paid the remaining balance due on a related debt. PharmaIN, Corp. rights to our program remain unchanged. Additionallyunchanged and the Company obligationremains obligated to pay a low single digit royalty on theroyalties equal to less than 1% of future net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma LLC members, and The Barrett Edge, Inc. pursuant to the Agreement and Plan of Merger, dated April 11, 2016, by and between LAT Pharma LLC. The Company has an obligation to pay a low single digit royalty on net sales of all terlipressin products covered by specified patents upeach company’s ascites drug development programs, or if such program is licensed to a maximumthird party, less than 5% of $200,000 per year pursuant to the Technology Transfer Agreement, dated July 25, 2016, by and between us and the University of Padova (Italy).each company’s net license revenues.

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.

On OctoberAugust 1, 2020,2021, the Company issued stock optionsbegan sponsoring an employee benefit plan subject to purchase 800 sharesSection 401(K) of common stockthe 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 Chief Financial Officer as part of her compensation. The stock options were issued401K Plan on a pre-tax salary reduction basis and are exercisable at an exercise price of $9.54 at any time from date of issuance and expire in 5 years from the date of issuance.

On October 13, 2020, the Company issued stock optionswill match 5% of the first 5% of an employee’s contributions to purchase 800 sharesthe 401K Plan. For the three months ended September 30, 2021, the Company made contributions of common stock as part of their annual board of director compensation. The stock options were issued and are exercisableapproximately $23,600.

Effective November 1, 2021, the Company relocated its headquarters to Nevada at $9.90 at any time from date of issuance and expire in 5 years from the date of issuance.9120 Double Diamond Parkway, Suite 1400, Reno Nevada 89521.

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;impositions requirements; and our capital needs.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. 

All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. When used in this report, the terms “BioVie”, “Company”, “we”, “our”, and “us” refer to BioVie Inc. 

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 document. report. 

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales, expenses and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) product development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation. 

Management’s Discussion

BioVie Inc. is a clinical-stage company pursuing the discovery, development, and commercialization ofdeveloping innovative drug therapies targetingto 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. Ourcirrhosis caused by NASH, hepatitis, and alcoholism. The initial disease target for BIV201 therapy is ascites, a serious medical condition affecting about 100,000 Americansrefractory ascites. These patients suffer from frequent life-threatening complications, generate more than $5 billion in annual treatment costs, and many times more worldwide. Our therapeutichave an estimated 50% mortality rate within 6 to 12 months. The US Food and Drug Administration (FDA) has not approved any drug candidate BIV201 is based on a drug that is approved in about 40 countries to treat related complicationsrefractory ascites. A Phase 2a clinical trial of liver cirrhosis (partBIV201 was completed in 2019, and a multi-center, randomized and controlled Phase 2b trial is currently underway at nine US medical centers including Vanderbilt University, the Mayo Clinic, and University of Pennsylvania (NCT04112199). Top-line results from this trial are expected in mid-2022, to be followed by a proposed single pivotal Phase 3 clinical trial beginning in late 2022. In June 2021, we received written feedback from the same disease pathway as ascites), but not yet availableFDA in the US. The active agentresponse to a Type B meeting request to conduct a pivotal US Phase 3 clinical trial in BIV201, terlipressin,HRS-AKI, which is a potent vasoconstrictor which islife-threatening complication of advanced ascites. Based on the guidance received in use for various medical conditions aroundsubsequent communications with the world. The goal is for BIV201FDA, we are revising certain elements of our proposed study and planning to interrupt the ascites disease pathway, thereby halting the cycle of accelerating fluid generationinitiate this study in ascites patients.early 2022.

In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc., a privately held clinical-stage pharmaceutical company, 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 late 2022. In addition to Alzheimer’s disease, in September 2021, the FDA authorized the company to initiate 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) is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD) participants treated with carbidopa/levodopa and NE3107. Forty (40) patients with a defined L-dopa “off state” will be randomized 1:1 placebo: 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. This study is planned to start in early 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 September 30, 20202021 to the three months ended September 30, 20192020

Net income (loss)

The net incomeloss for the three months ended September 30, 20202021 was approximately $7.3$5.5 million as compared to a net lossincome of $3.8$7.3 million for the three months ended September 30, 2019.2020. The increasedecrease in net income of approximately $11.1$12.8 million was primarily due to a change in fair value of derivative liabilities of approximately $7.9$8.3 million and an increase in operating expenses of approximately $5.1 million, offset by the decreasesa decrease in interest expense of $2.9 million and operating expenses of approximately $329,000.$558,000.

Total operating expenses for the three months ended September 30, 20202021 were approximately $387,000$5.5 million as compared to $706,000$387,000 for the three months ended September 30, 2019.2020.  The net decreaseincrease of approximately $319,000$5.2 million during the three months ended September 30, 2020,2021 was primarily due to minimalan increase in research and development activitiesexpenses of approximately $2.7 million, primarily attributed to the development of the recently purchased Neuroscience biopharmaceutical assets and continuation of our Orphan Drug candidate BIV201’s Phase 2b clinical trial, which was initiated earlier in the 2021 calendar year, as well as an increase in selling, general and administration expenses of $2.4 million, primarily due to stock-based compensation awarded to the Company focused its efforts on closing its public offering of registered common stock which occurred on September 22, 2020.management team.

Research and Development Expenses

Research and development expenses were approximately $2.8 million and $101,000 for the three months ended September 30, 2021 and 2020, arespectively. The net decreaseincrease of approximately $241,000, from $342,000$2.7 million, was primarily due to additional operating expenses related to our Neuroscience operations totaling approximately $2 million and the increased activities of our Liver Cirrhosis operations totaling approximately $700,000, as our Orphan Drug candidate BIV201’s Phase 2b clinical trial initiated in June 2021 continues to ramp up. The level of research and development activity for the three months ended September 30, 2019. Research2021 strongly contrasts to the three months ended September 30, 2020, when the Company was focused on closing its capital raise.

Approximately $1.7 million of the $2.7 million increase in research and development activities were curtailedexpenses was attributed to its minimum level asincreased compensation expense in connection with the Company focused its efforts on closinghiring of its public offeringtwo executives that oversee our Neuroscience research and development and product development. The $1.7 million increase consisted of an increase in payroll expense by approximately $151,000, bonus expense of approximately $1.1 million, including a retention bonus to certain employees totaling $1.0 million to be paid in 24 equal monthly installments, and stock compensation granted to the management team totaling approximately $420,000. The remaining increase in research and development expense of approximately $1 million consisted of expenses for the clinical operations related to BIV201’s Phase 2b clinical trials totaling approximately $506,000 and the preparation and initiation of the Alzheimer potentially pivotal Phase 3 study, which occurred on September 22, 2020.was initiated in August 2021 totaling approximately $533,000.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were approximately $2.6 million and $228,000 for the three months ended September 30, 2021 and 2020, compared to $307,000 for the three months ended September 30, 2019.respectively. The net decreaseincrease of approximately $79,000$2.4 million was primarily attributed to increased compensation expense of approximately $1.9 million, which consisted of stock-based compensation expense of approximately $1.7 million representing restricted stock units and stock options awarded to the executive management team of approximately $1.3 million and the amortization cost of $385,000 for the stock option granted the directors in the prior fiscal year; and approximately $227,000 related to bonus and salary increases. The remaining net increase of approximately $500,000 is attributed to increased expenses related to being listed on a decrease innational exchange including listing fees and investor relations, legal and professional fees, of $100,000 offset by an increaseoffice expenses and website development expenses, as the Company expanded its operations in the insurance premiumsdevelopment of $21,000 for increased insurance coverage.the recent neuroscience pharmaceutical assets.

Capital Resources and Liquidity

OnAs of September 22, 2020,30, 2021, the Company closed a registered public offering (the “Offering”) issuing 1,799,980 of its Class A common stock, par value $0.0001 per share (the “Common Stock”) at $10 per share, resulting in net proceeds to the Company of approximately $15.6 million, net of issuance costs of approximately $2.4 million; and of which approximately $1.8 million was used to satisfy all amounts owing in respect of a 10% OID Convertible Delayed Draw Debenture (the “Debenture”) due September 24, 2020 held by the Company’s controlling stockholder, Acuitas Group Holdings, LLC (“Acuitas”).

Concurrently with the closing of the Offering and repayment of the Debenture, the Company issued an aggregate of 6,909,582 shares of Common Stock to Acuitas, representing (i) shares issuable pursuant to Acuitas’ rights under the Purchase Agreement dated July 3, 2018 with the Company resulting from a 50% adjustment of the purchase price applicable to its initial investment in the Company and the exercise price of the warrants received in such transaction and the price per share should it exercise certain rights to purchase additional securities in the event of certain reductions in the useful life of the Company’s intellectual property rights, and (ii) the automatic exercise of warrants issued to Acuitas in connection with the Debenture financing at the par value of the Common Stock. (See Note 5 Related Party Transactions in the accompanying interim condensed financial statements.)

On September 17, 2020, the Company’s Common Stock was approved for listing on The NASDAQ Capital Market (“Nasdaq”) under the symbol “BIVI” and began trading on September 18, 2020.

Subsequent to the closing on September 22, 2020, the Company reduced further its accounts payable and accrued liabilities and on September 30, 2020 had working capital of approximately $13.1$19.3 million, cash of approximately $20.5 million, stockholders’ equity of approximately $20.2 million, and cashan accumulated deficit of $13.2approximately $230.4 million. Total liabilities were reduced to approximately $256,000 on September 30, 2020, a decrease of $23.3 million from $23.6 million on June 30, 2020. The decreaseIn addition, the Company has not generated any revenues and no revenues are expected in the total liabilities resulted from the pay off of the Debenture of approximately $1.8 million, expiring the derivative liability from the conversion option on Debenture; and the redemption of the warrants which eliminated its related derivative liabilities.

As of September 30, 2020, stockholders’ equity was approximately $14.6 million and its accumulated deficit was approximately $87 million. As a development stage enterprise, the Company expects substantial losses in future periods. The accompanying interim condensed financial statements were 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. Based on the Company’s plans, management believes it has sufficient funds to fund its operations through our next round of clinical trials through November 2021.

foreseeable future. The Company’s future operations will beare dependent on the success of the Company’s ongoing development and commercialization effort,efforts, as well as its ability to to secure additional financing as needed.

In August and September of 2021, the Company closed two capital raises issuing an aggregate of 2.6 million shares of its common stock at a price of $8.00 per share for aggregate net proceeds of approximately $18.5 million. 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, 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. 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 continueattempt 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 emergence of widespread health emergencies or pandemics ofsuch as the coronavirus ("Covid-19"(“COVID-19”) pandemic (and its related variants), may lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability, including theinstability. Although some jurisdictions have relaxed these measures, particularly as more and more people are vaccinated, others have not or have reinstated them as COVID-19 cases surge and variants emerge The duration and spread of the outbreak and restrictionsCOVID-19 pandemic and the long-term impact of Covid-19COVID-19 and its variants on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted.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.

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. 

Critical Accounting Policies and Estimates

For the three-month period ended September 30, 2020,2021, 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, 2020.2021.

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 September 30, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

To our knowledge, neither the Company nor any of ourits 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

Not applicable

You may experience future dilution as a result of future equity offerings or if we issue shares subject to smaller reporting companies.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 September 30, 2021, there were warrants outstanding to purchase an aggregate of 158,761 shares of common stock at exercise prices ranging from $1.88 to $75.00 per share, 2,121,035 shares issuable upon exercise of outstanding options at exercise prices ranging from $2.80 to $42.09 per share, and 43,420 restricted stock units convertible to an equal amount shares. 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

All sales of unregistered securities during the three months ended September 30, 2020 were previously disclosed in a Current report on Form 8-K.None 

Item 3. Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

None

Item 5.  Other Information

None 

On June 16, 2020, the Company amended its bylaws to increase the size of its board of directors to nine directors.

Item 6. Exhibits

(a) Exhibit index

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.,