UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

(Mark One) 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________to _____________

Commission File Number: 000-55292

BIOVIE INC.

(Exact name of registrant as specified in its charter)

Nevada	46-2510769
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 Cummings Center, Suite 247-C

Beverly, MA 01915

(Address of principal executive offices, Zip Code)

(312)-283-5793

(Registrant's telephone number, including area code)

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒                                          No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒                                          No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer  (Do not check if a smaller reporting company)	☐	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐                                          No ☒

The number of shares outstanding of each of the issuer’s classes of common equity, as of December 31, 2017 was 94,971,365.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Balance Sheets as of December 31, 2017 (unaudited) and June 30, 2017 (audited)	1
	Condensed Statements of Operations for the three and six months ended December 31, 2017 and 2016 (unaudited)	2
	Condensed Statements of Cash Flows for the three and six months ended December 31, 2017 and 2016 (unaudited)	3
	Notes to Condensed Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition of and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Mine Safety Disclosures	15
Item 5.	Other Information	15
Item 6.	Exhibits	16
SIGNATURES		17

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include our; research and development activities, distributor channel; compliance with regulatory impositions; and our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

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.

BIOVIE INC.

CONDENSED BALANCE SHEETS

	December 31,			June 30,
	2017			2017
ASSETS	(unaudited)
CURRENT ASSETS:
Cash	$	1,824		$	5,140
Total Current Assets		1,824			5,140
OTHER  ASSETS:
Intangible Assets (Net of Amortization)		1,898,669			2,013,357
Goodwill		345,711			345,711
Total Other Assets		2,244,380			2,359,068
TOTAL ASSETS	$	2,246,204		$	2,364,209
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses	$	629,218		$	470,973
Related Party Loan		—			35,000
Accrued Payroll		250,000			125,000
Total Current Liabilities		879,218			630,973
LONG-TERM LIABILITIES:
Notes Payable, Related Party		575,917			575,918
Total Long-Term Liabilities		575,917			575,918
TOTAL LIABILITIES		1,455,136			1,206,891
STOCKHOLDERS' EQUITY
Preferred stock; $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized; 94,971,365 and 91,925,000 shares issued and outstanding, respectively		9,497			9,192
Additional paid in capital		4,282,102			3,483,134
Accumulated deficit		(3,500,531	)		(2,335,009	)
Total Stockholders' Equity		791,068			1,157,318
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,246,204		$	2,364,209

See accompanying notes to condensed financial statements

 -1-

BIOVIE INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months			For the Three Months			For the Six Months			For the Six Months
	Ended			Ended			Ended			Ended
	December 31,			December 31,			December 31,			December 31,
	2017			2016			2017			2016
REVENUE:	$	—		$	—		$	—		$	—
OPERATING EXPENSES:
Amortization		57,344			57,344			114,689			114,689
Research and development expenses		186,841			128,559			228,695			255,829
Payroll expenses		71,348			71,348			142,696			142,696
Professional fees		150,803			93,015			604,414			186,179
Selling, general and administrative expenses		28,470			7,533			66,545			9,760
TOTAL OPERATING EXPENSES		494,807			357,799			1,157,038			709,152
LOSS FROM OPERATIONS		(494,807	)		(357,799	)		(1,157,038	)		(709,152	)
OTHER EXPENSE (INCOME):
Interest expense		7,875			—			8,486			—
Interest income		—			—			(1	)		(11	)
TOTAL OTHER EXPENSE (INCOME), NET		7,875			—			8,485			(11	)
NET LOSS	$	(502,682	)	$	(357,799	)	$	(1,165,523	)	$	(709,141	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON  SHARES OUTSTANDING, BASIC AND DILUTED		94,848,836			87,504,667			94,078,045			87,355,108

See accompanying notes to condensed financial statements

 -2-

BIOVIE INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months			For the Six Months
	Ended			Ended
	Ended December 31,			Ended December 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,165,523	)	$	(709,141	)
Adjustments to reconcile net loss to net cash to cash used by operating activities:
Services paid with common stock		364,500			—
Amortization of intangible assets		114,689			114,689
Share based compensation expense		39,772			20,125
Changes in operating assets and liabilities
Decrease in prepaid expenses		—			6,982
Increase in:
Accounts Payable		158,245			212,621
Accrued Payroll		125,000			125,000
Net cash used by operating activities		(363,317	)		(229,725	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable		(35,000	)		10,500
Proceeds from issuance of common Stock		295,001			99,987
Proceeds from issuance of Warrants		100,000			—
Net cash provided by financing activities		360,001			110,487
Net decrease in cash		(3,316	)		(119,238	)
Cash, beginning of period		5,140			123,757
Cash, end of period	$	1,824		$	4,519
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	—		$	—
Cash paid for income tax	$	—		$	—

See accompanying notes to condensed financial statements

 -3-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

1. Background

BioVie Inc. (the “Company”) is a clinical-stage company pursuing the discovery, development, and commercialization of innovative drug therapies. The Company is currently focused on developing and commercializing BIV201, a novel approach to the treatment of ascites due to chronic liver cirrhosis. In March 2017, the Company received notification from the FDA that it could initiate a Phase 2a US clinical trial. In April the Company signed a Cooperative Research and Development Agreement (CRADA) with the McGuire Research Institute/VA in Richmond, VA, and began dosing patients with BIV201 in September 2017.

BIV201 has the potential to improve the health of thousands of patients suffering from life-threatening complications of liver cirrhosis due to hepatitis, NASH, and alcoholism. It has FDA Fast-Track status and Orphan Drug designation for the most common of these complications, ascites, which represents a significant unmet medical need. The FDA has never approved any drug specifically for treating ascites.

The BIV201 development program began at LAT Pharma LLC. On April 11, 2016, the Company acquired LAT Pharma LLC and the rights to its BIV201 development program. The Company currently owns all development and marketing rights to its drug candidate. The Company and PharmaIN have exchanged small (low single-digit) ownership rights to each other’s ascites drug development programs. The Company has an issued US Patent covering the use of BIV201 for the treatment of ascites patients in the outpatient setting using ambulatory pump infusion, and has filed a patent application for its drug candidate in Japan, as well as a Partnership in Clinical Trials (PCT) in Europe.

The Company’s activities are subject to significant risks and uncertainties including failure to secure additional funding to properly execute the Company’s business plan.

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the six months ended December 31, 2017, the Company had a net loss of $1,165,523.  As of December 31, 2017, the Company has not yet earned any revenues. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to begin operations and to achieve a level of profitability. Since inception, the Company has financed its activities principally from the sale of equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

Unaudited Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X.  Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 -4-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

3. Significant Accounting Policies (continued)

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading.  The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 

Cash

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of the Company’s cash balances were fully insured at December 31, 2017. 

Financial Instruments

The Company’s financial instruments include cash and accounts payable. The carrying amounts of cash and accounts payable approximate their fair value, due to the short-term nature of these items. 

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expenses. The Company expensed $228,695 for research and development for the six months ended December 31, 2017. 

Income Taxes

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending on the classification of the assets or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. 

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits at December, 31, 2017 and since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. 

Earnings (Loss) per Share

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. For the six months ended December 31, 2017 all outstanding options have been excluded from the calculation of the diluted net loss per share since their effect was anti-dilutive.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 -5-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

3. Significant Accounting Policies (continued)

The table below shows the number of outstanding options and shares as of December 31,2017.

	Number of Shares (Thousands)
Stock Options	4,550
Warrants	9,231
Total	13,781

Stock-based Compensation 

The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). 

Fair Value

The carrying value of the Company’s financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accrued payroll, accounts payable, accrued expenses and related party advances.

Recent accounting pronouncements

The Company has reviewed recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC and did not or are not believed by management to have a material impact on the Company’s financial statements.

4. Related Party Loan

LAT Pharma was given a zero-interest bearing loan by the Company’s CEO, Jonathan Adams in the amount of $5,000 in August 2015 and $5,000 in November 2015.  The total of $10,000 was outstanding when the Company merged with LAT Pharma. On June 16^th, 2017, the Company was given an additional $25,000 zero-interest bearing loan by Jonathan Adams.  During the year ended December 31, 2017, the Company repaid $35,000 and the loan no longer has an outstanding balance. 

5. Commitments and Contingencies

Office Lease 

On January 1, 2014 the Company executed a lease agreement with Cummings Properties for the Company’s office of 270 square feet at 100 Cummings Center, Suite 247-C, Beverly, MA 01915. The lease is for a term of five years from January 1, 2014 to December 30, 2018 and requires monthly payments of $369. 

Employment Agreements 

On April 11, 2016 the Company entered into employment agreement with CEO Jonathan Adams. The Company’s agreement provides for a three-year term with minimum annual base salary of $250,000 per year.

On September 24, 2017, the Board of Directors of BioVie Inc. appointed R. Richard Wieland II as an interim Chief Financial Officer of BioVie.  Mr. Wieland is an experienced executive in the healthcare field, having previously served as Chief Financial Officer of several other biopharmaceutical companies.

 -6-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

6. Stock Options

The fair market value of the stock options is estimated using the Black Scholes valuation model and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatilities of 3 comparable companies of the daily closing price of their respective common stock; the expected term of options granted is based on the average time outstanding method; and the risk free interest rate is based on the US Treasury bonds issued with similar life terms to the expected life of the grant.

During the six month ended December 31, 2017, the Company issued stock options to consultants and board of directors for services provided to the Company. The following key assumptions were used in the valuation model to value stock option grants for each respective period:

Valuation Date	09/21/2017			10/13/2017			10/25/2017			10/27/2017			11/10/2017
Stock Price	$	0.20		$	0.20		$	0.21		$	0.21		$	0.23
Exercise Price	$	0.20		$	0.20		$	0.21		$	0.21		$	0.23
Term (expected term for options)		2.000			2.000			2.000			2.000			2.000
Volatility		32.75	%		31.95	%		31.61	%		31.56	%		31.46	%
Annual Rate of Quarterly Dividends		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Discount Rate - Bond Equivalent Yield		1.45	%		1.50	%		1.60	%		1.60	%		1.64	%
Call Option Value ($Millions)	$	0.04		$	0.04		$	0.04		$	0.04		$	0.04
Fair Value	$	3,903		$	3,825		$	5,993		$	3,989		$	4,366

Stock option activity for the Company's plans for the period ended December 31, 2017 is summarized below:

			Weighted
		Weighed-	Average	Aggregate
		Average	Remaining	Intrinsic
	Shares	Exercise	Contractual	Value
Options	(Thousands)	Price	Term	(Thousands)
Outstanding at July 1, 2016	3,000	0.06	2	-
Granted	1,000	0.24	2	-
Outstanding at June 30, 2017	4,000	0.10	2	-
Granted	550	0.21	2	-
Outstanding at December 31, 2017	4,550	0.12	2	-
Exercisable as of December 31, 2017	2,550	0.16	2	-

The compensation expense for the six months ended December 31, 2017 includes $17,696 related to the stock options described above. The legal and professional expenses for the six months ended December 31, 2017 includes $22,076 related to the stock options described above. The estimated compensation expense for the next six months ended June 30, 2018 is $17,696.

Offerings of Common Stock and Warrants

In August 2017, the Company sold and issued an aggregate of 886,364 shares of common stock and warrants to purchase 443,182 shares of common stock in a private placement transaction for aggregate gross proceeds of approximately $195,000. The purchase price for the common stock and warrants was $0.22 per share. The warrants are exercisable at an exercise price of $0.60 at any time from date of issuance until 5 years from the date of issuance.

In August 2017, the Company issued 1,500,000 shares of common stock to Aspire Capital in a private placement transaction in exchange for services. The shares were valued at $0.22 per share, and the value of the services were $330,000.

 -7-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

6. Stock Options (continued)

Between July 2017 and September 2017, the Company sold an aggregate of 250,000 shares of common stock in transactions under the Aspire Equity Line for aggregate gross proceeds of $50,000. The average purchase price for the common stock was $0.20 per share.

In August 2017, the Company issued an aggregate of 32,727 shares of common stock to compensate certain initial investors who purchased common stock at a $0.25 share price in a Series C offering prior to a reduction in the offering price to $0.22 per share.

In October 2017, the Company sold and issued an aggregate of 159,091 shares of common stock and warrants to purchase 79,545 shares of common stock in a private placement transaction for aggregate gross proceeds of approximately $35,000. The purchase price for the common stock and warrants was $0.22 per share. The warrants are exercisable at an exercise price of $0.60 at any time from date of issuance until 5 years from the date of issuance.

In November 2017, the Company issued 150,000 shares of common stock in a private placement transaction in exchange for services. The shares were valued at $0.23 per share, and the value of the services were $34,500. The Company also sold and issued an aggregate of 68,182 shares of common stock and warrants to purchase 34,091 shares of common stock in a private placement transaction for aggregate gross proceeds of approximately $15,000. The purchase price for the common stock and warrants was $0.22 per share. The warrants are exercisable at an exercise price of $0.60 at any time from date of issuance until 5 years from the date of issuance.

In December 2017, the Company issued warrants to purchase 2,500,000 shares of common stock in a private placement transaction for aggregate gross proceeds of $100,000. The purchase price for the warrants were $0.04 per warrant. The warrants are exercisable at an exercise price of $0.20 at any time from date of issuance until 7 years from the date of issuance.

The following table summarizes the warrants that have been issued:

Aggregate Number of Warrants Issued		Exercise Price		Issue Date	Expiration Date
	5,000,000	$	0.50	April 2013	April 2018
	112,500	$	0.50	October 2016	October 2021
	125,000	$	0.50	November 2016	November 2021
	50,000	$	0.50	December 2016	December 2021
	500,000	$	0.50	January 2017	January 2022
	250,000	$	0.50	March 2017	March 2022
	120,000	$	0.60	May 2017	May 2022
	79,545	$	0.60	July 2017	July 2022
	363,636	$	0.60	August 2017	August 2022
	79,545	$	0.60	October 2017	October 2022
	34,091	$	0.60	November 2017	November 2022
	2,500,000	$	0.20	December 2017	December 2024

 -8-

BIOVIE INC.

Notes to Condensed Financial Statements

For the Six Months Ended December 31, 2017 and 2016

(unaudited)

7. Renegotiated Debt

On March 23, 2017, Barrett Ehrlich agreed to defer the payment of his consulting fee debt of $173,333.33 until December 31, 2019, through the issuance of a Promissory note.  The promissory note does not carry any interest charge as long as the amount is paid in full before December 31, 2019.  The consulting fee debt has thereby been reclassified from a current liability to a long-term liability on the balance sheet. Any portion of the balance due under the note that remains unpaid after December 31, 2019 will accrue interest at a rate of 5% per annum until paid in full.

On March 23, 2017, Elliot Ehrlich agreed to forgive 50% of his salary debt of $444,056.25.  The adjusted salary debt is $222,028.13.  Elliot Ehrlich also agreed to defer the payment of his salary debt of $222,028.13 until December 31, 2019, through the issuance of a Promissory note.  The promissory note does not carry any interest charge as long as the amount is paid in full before December 31, 2019.  The salary debt has thereby been reclassified from a current liability to a long-term liability on the balance sheet and the salary debt forgiven has been reflected on the income statement as other income. Any portion of the balance due under the note that remains unpaid after December 31, 2019 will accrue interest at a rate of 5% per annum until paid in full.

On March 23, 2017, Jonathan Adams agreed to defer the payment of his salary debt of $180,555.64 until December 31, 2019, through the issuance of a Promissory note.  The promissory note does not carry any interest charge as long as the amount is paid in full before December 31, 2019.  The salary debt has thereby been reclassified from a current liability to a long-term liability on the balance sheet. Any portion of the balance due under the note that remains unpaid after December 31, 2019 will accrue interest at a rate of 5% per annum until paid in full.

8. Subsequent Event

In January 2018, the Company sold an aggregate of 333,333 shares of common stock in a private placement transaction for aggregate gross proceeds of $50,000. The purchase price for the common stock was $0.15 per share.

 -9-

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 include our; research and development activities, distributor channel; compliance with regulatory impositions; and our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

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.

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 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.

We are a clinical stage biotechnology company engaged in the discovery, development and commercialization of therapies targeting life-threatening complications of liver cirrhosis. Our initial disease target is ascites, a serious medical condition affecting about 100,000 Americans and many times more worldwide. Our therapeutic drug candidate BIV201 is based on a drug that is approved in about 40 countries to treat related complications of liver cirrhosis (part of the same disease pathway as ascites), but not yet available in the US. The active agent in BIV201, terlipressin, is a potent vasoconstrictor which is in use for various medical conditions 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.

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We have incurred $1,157,038 of operating expenses for the six months ended December 31, 2017.  We are now engaged in organizational activities and sourcing compounds and materials. We anticipate incurring other costs associated with equipment purchases and general and administrative expenses, including employee salaries and benefits, legal expenses, and other costs associated with an early stage, publicly-traded company.

The amounts that we actually spend for any specific purpose may vary significantly, and will depend on a number of factors including, but not limited to, the pace of progress of our research and development, market conditions, and our ability to qualify vendors. In addition, we may use a portion of any net proceeds to acquire complementary compounds; however, we do not have plans for any acquisitions at this time. We will have significant discretion in the use of any net proceeds. Investors will be relying on the judgment of our management regarding the application of the proceeds of any sale of our Common Stock.

Requirement for Additional Capital

The Company has engaged in limited research and development activities. We currently do not have sufficient funds to meet our planned drug development for the next twelve (12) months and we may not be able to obtain the necessary financing on terms and conditions acceptable to the Company. Assuming that we are successful in raising additional financing, we plan to incur the following expenses over the next twelve (12) months:

● Research and Development of $3,000,000, which includes planned clinical trial costs for the development of BIV201;

● Corporate overhead of $500,000, which includes budgeted legal, accounting and other costs expected to be incurred; and

● Staffing costs of $500,000.

The Company had approximately $1,824 of cash on hand at December 31, 2017 and will be unable to proceed with its planned drug development, meet its administrative expense requirements, capital costs, or staffing costs without obtaining additional net financing of approximately $250,000 to $500,000 to meet its near-term budgetary needs. 

The Company has limited experience with pharmaceutical drug development. As such these budget estimates may not be accurate. In addition, the actual work to be performed can only be broadly projected, as is normal with any scientific work. As further work is performed, additional work may become necessary or change in plans or workload may occur. Such changes may have an adverse impact on our estimated budget. Such changes may also have an adverse impact on our projected timeline of drug development.

Management intends to use capital and debt financing, as required, to fund the Company's operations. There can be no assurance that the Company will be able to obtain the additional capital resources necessary to fund its anticipated obligations for the next twelve (12) months.

Capital Resources and Liquidity

As of December 31, 2017, we had $1,824 of cash on hand in our corporate bank account. The Company is considered to be a development stage company and will continue in the development stage until generating revenues from the sales of its products or services. As a result, the report of the independent registered public accounting firm on our financial statements as of June 30, 2017, contains an explanatory paragraph regarding a substantial doubt about our ability to continue as a going concern.

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We do not have sufficient funds for the next (12) twelve months and must raise cash to implement our strategy and stay in business. If we are unable to raise additional funds to develop our compounds, we may be required to scale back our development plans by reducing expenditures for employees, consultants, business development, and other envisioned expenditures. This could reduce our ability to develop BIV201, our drug candidate, and implement our business plan. In that event, investors should anticipate that their entire investment may be lost and there may be no ability to profit from this investment.

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 financing, we cannot assure you 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.

If we are unable to raise additional funds, we will need to do one or more of the following

·delay, scale-back or eliminate some or all of our research and product development programs;

·provide licenses to third parties to develop and commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves;

·seek strategic alliances or business combinations;

·attempt to sell our company;

·cease operations; or

·declare bankruptcy.

We believe that our existing cash and cash equivalents will not be sufficient to meet our operating and capital requirements through June 30, 2018. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to secure additional debt or equity financing in a timely manner, or at all, which could require us to scale back our business plan and operations. 

The above conditions raise substantial doubt about our ability to continue as a going concern.  The financial statements included elsewhere herein were prepared under the assumption that we would continue our operations as a going concern.  Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.  Without additional funds from debt or equity financing, sales of our intellectual property or technologies, or from a business combination or a similar transaction, we will soon exhaust our resources and will be unable to continue operations.  If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.

Our management intends to attempt to secure additional required funding primarily through additional equity or debt financings.  We may also seek to secure required funding through sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research and development efforts, or similar transactions.  However, there can be no assurance that we will be able to obtain required funding.  If we are unsuccessful in securing funding from any of these sources, we will defer, reduce or eliminate certain planned expenditures in our research protocols.  If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment in us.

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Emerging Growth Company

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

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. 

Results of Operations

Research and Development

Research and development expenses were $186,841 for the three months ended December 31, 2017, an increase of $58,282, compared to $128,559 for the three months ended December 31, 2016. Research and development expenses were $228,695 for the six months ended December 31, 2017, a decrease of $27,134 compared to $255,829 for the six months ended December 31, 2016. For the prior year, research and development expenses were $466,354. The research and development expenses were primarily due to the expenses incurred for clinical development activities.

Selling, General and Administrative

Selling, general and administrative expenses were $28,470 for the three months ended December 31, 2017, an increase of $20,937, compared to $7,533 for the three months ended December 31, 2016. Selling, general and administrative expenses were $66,545 for the six months ended December 31, 2017, an increase of $56,785, compared to $9,760 for the six months ended December 31, 2016. For the prior year, selling, general and administrative expenses were $69,122. The increase in selling, general and administrative expenses was primarily due to travel and conference expenses associated with financing activities.

Professional Fees

Professional fees were $150,803 for the three months ended December 31, 2017, an increase of $57,788 compared to $93,015 for the three months ended December 31, 2016. Professional fees were $604,414 for the six months ended December 31, 2017, an increase of $418,235, compared to $186,179 for the six months ended December 31, 2016. For the prior year, professional fees were $503,369. The increase in professional fees related to a large expense for financial and strategic advisory services paid in BioVie common stock.

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Payroll Expenses

Payroll expenses were $71,348 for the three months ended December 31, 2017, the same amount as the three months ended December 31, 2016. Payroll expenses were $142,696 for the six months ended December 31, 2017, the same amount as the six months ended December 31, 2016. For the prior year, professional fees were $285,392. Payroll expenses were related to accrued salary for the chief executive officer, Jonathan Adams.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable

Item 4.  Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2017 covered by this Quarterly Report on Form 10-Q.  Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company’s Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after December 31, 2017.

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the six months ended December 31, 2017, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

To our knowledge, neither the Company nor any of our 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 2. Unregistered sales of equity securities

None

Item 3. Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

None

Item 5.  Other Information

None

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Item 6. Exhibits

(a) Exhibit index

Exhibit
31.1	Certification of Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

 (b)  Reports on Form 8-K

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BioVie, INC.

Signature	Titles	Date
/s/ Jonathan Adams
Jonathan Adams	Chief Executive Officer, Principal Executive Officer, Principal Accounting Officer	February 14, 2018
Richard Wieland	Chief Financial Officer	February 14, 2018

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