| Related Party Transactions | 5. Related Party Transactions Asset Acquisition with NeurMedix On April 27, 2021, the Company entered into an APA with NeurMedix and Acuitas,
which are related party affiliates, pursuant to which the Company acquired certain assets from NeurMedix and assumed certain liabilities
of NeurMedix, in exchange for consideration of cash and shares of common stock. The acquired assets include, among others, those related
to certain drug candidates being developed by NeurMedix, including NE3107, a small molecule orally administered inhibitor of insulin resistance
and the pathological inflammatory cascade, with a novel mechanism of action that has potential applications for treatment against Alzheimer’s
Disease and Parkinson’s Disease. Subject to the terms and conditions of the Asset Purchase Agreement, following
the closing, the Company may be obligated to deliver contingent stock consideration to NeurMedix (or its successor). Previously, the Company
was obligated to deliver contingent stock consideration to NeurMedix (or its successor) consisting of shares of the Company’s common
stock having an aggregate value of up to $3.0 billion, subject to the achievement of certain clinical, regulatory and commercial milestones
related to the drug candidates to be acquired by the Company from NeurMedix, and subject to a cap limiting each issuance of shares if
such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 89.9999% of the Company’s issued
and outstanding common stock. Pursuant to Amendment No. 1 to the APA, dated May 9, 2021, the Company may now be obligated to deliver contingent
stock consideration to NeurMedix (or its successor) consisting of up to 18 million shares of BioVie’s common stock, with 4.5 million
shares issuable upon the achievement of each of the four milestones set forth in the APA, subject to a cap limiting the issuance of shares
if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 87.5% of the Company’s issued
and outstanding common stock. On June 10, 2021, and pursuant to the Asset Purchase Agreement, the Company
issued to Acuitas (as NeurMedix’s assignee) 8,361,308 shares of the Company’s common stock and made a cash payment of approximately
$2.3 million, representing NeurMedix’s direct and documented cash expenditures to advance certain programs from March 1, 2021 through
the closing date and cash payments to other third parties for expenses totaling approximately $4.0 million for due diligence, legal fees,
transaction fees and the fairness opinion. Since the transaction was between entities under common control, there were no fair value adjustments
of the purchased assets and the historical cost basis of the purchased assets was zero. The total consideration paid was expensed as in
process research and development expense in the accompanying statement of operations for the year ended June 30, 2021. Equity Transactions with Acuitas On September 22, 2020, concurrent with the closing of the Company’s
registered public offering, (“the 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 During the year ended June 30, 2021, the Company received additional draws
under the Debenture totaling $436,000. The total draws as of September 22, 2020 were $1.7 million and the related total number of warrants
issuable at $4.00 per share of common stock was 424,750 of which 328,250 warrants had been issued. In accordance with the Debenture agreements,
at September 22, 2020 upon the Company’s close of its public offering, all the warrants issued related to the debenture totaling
1,453,250 were mandatorily redeemed along with the additional 96,500 shares common stock issued to Acuitas. The following paragraphs summarize the background of those financings and
arrangements which were settled and redeemed on September 22, 2020. On July 3, 2018, we entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with Acuitas and certain other purchasers identified in the Purchase Agreement (together with Acuitas, the “Purchasers”)
pursuant to which (i) the Purchasers agreed to purchase an aggregate of 2,133,332 shares of the our Series A Convertible Preferred Stock
(the “Preferred Stock”) at a price per share of $1.50 per share of Preferred Stock (the “Initial Sale”) and (ii)
we agreed to issue warrants (the “Warrants”) to purchase 1,706,666 shares of common stock, each subject to the terms and conditions
set forth in the Purchase Agreement, for an aggregate consideration of $3.2 million. We received $160,000 of the $3.2 million in April
and May 2018 as prepaid equity. Acuitas also received an additional 6,667 Warrants in connection with the payoff of a note issued by us
in favor of Acuitas. The Initial Sale and issuance of the Warrants occurred on July 3, 2018. In addition, Acuitas had the option to purchase
up to an additional 1,600,000 shares of common stock at a price per share of $1.88, and warrants on the same terms as the Warrants, within
two weeks following the one year anniversary of the closing of the Initial Sale (the “Subsequent Sale”) in the event that
we did not obtain $3,000,000 of funding through various non-dilutive grants prior to the one year anniversary of the closing of the Initial
Sale, less any federal or FDA grant funding received by the Company. Acuitas is controlled by our Chairman and Chief Executive Officer, Terren
Peizer and the Purchasers included James Lang, Cuong Do and Michael Sherman, who are members of our Board; and Jonathan Adam, a former
Board member. The Purchase Agreement contained customary representations and warranties.
In connection with the disclosure schedule associated with the representations and warranties, we also disclosed customary information,
including the following: (i) the existence of the Mallinckrodt petition before the U.S. Patent Trial and Appeal Board, (ii) our capitalization,
(iii) our obligation to pay a low single digit royalty on the net sales of BIV201 (continuous infusion terlipressin) to be shared among
LAT Pharma LLC members, PharmaIN Corporation and The Barrett Edge, Inc. pursuant to the Agreement and Plan of Merger, dated April 11,
2016, by and between LAT Pharma LLC and us, (iv) our obligation to pay a low single digit royalty on net sales of all terlipressin products
covered by specified patents up to a maximum of $200,000 per year pursuant to the Technology Transfer Agreement, dated July 25, 2016,
by and between us and the University of Padova (Italy), and (v) certain recent issuances of common stock by us. Each share of Preferred Stock automatically converted into 1 share of common
stock upon the filing with the Secretary of State of the State of Nevada of a Certificate of Amendment to our Articles of Incorporation
(the “Amendment”) on August 13, 2018 that increased the number of authorized shares of common stock to 800,000,000. The Amendment
was approved by the written consent of the holders of more than a majority of our issued and outstanding common stock on July 3, 2018
and was filed with the Secretary of State of the State of Nevada 20 calendar days following the distribution of our Definitive Information
Statement on Schedule 14 that was filed with the SEC on July 13, 2018. Pursuant to a letter agreement dated June 24, 2019, Acuitas agreed to modify
its existing rights under the Purchase Agreement so that:
- Acuitas agreed to immediately exchange its existing 1,606,667 Warrants for common stock such that it will have effectively exercised its Warrants in full pursuant to a cashless exercise thereof at an assumed current market price of $45.00 per share and, as a result received an aggregate of 95% of the shares covered thereby, or 1,526,094 shares of common stock;
- Acuitas agreed to (i) waive its rights to a 50% adjustment of the purchase price of the Preferred Stock in the Initial Sale, the exercise price of the Warrants and the price per share in the Subsequent Sale in the event of certain reductions in the useful life of our current intellectual property rights, and (ii) effectively exercise its rights to purchase securities in a Subsequent Sale pursuant to a “cashless purchase” at an assumed current market price of approximately $11.25 per share, conditioned in each case on the listing of our common stock on Nasdaq or the raising of $2.0 million in additional funds in the form of another securities offering, in either case not later than November 30, 2019, which will result Acuitas having irrevocably waived its rights to an adjustment in the purchase price of the Preferred Stock in the Initial Sale and the exercise price of the Warrants and the purchase price of per share in the Subsequent Sale upon the issuance by us of an aggregate of 1,339,958 shares of common stock (the “Subsequent Sale Shares”) to Acuitas, which is expected to occur concurrently with the closing of our potential public offering and listing on Nasdaq;
- Acuitas shall in exchange for the foregoing agreements and waivers have the option to purchase additional shares of common stock and warrants to purchase one share of common stock for each share of common stock purchased during the period from September 1, 2019 to November 30, 2019 at the then-effective purchase price of the Preferred Stock in the Initial Sale (the “Funding Option”), provided that any shares issued pursuant to any exercise of the Funding Option will reduce share-for-share the amount of shares issued pursuant to the deemed exercise of its rights to purchase securities in a Subsequent Sale mentioned above. Convertible Debenture Transaction with Acuitas On September 24, 2019, the Company entered into a Securities Purchase Agreement
(the “2019 Purchase Agreement”) with Acuitas pursuant to which (i) Acuitas agreed to purchase a 10% OID Convertible Delayed
Draw Debenture due September 24, 2020 for an aggregate commitment amount of up to $2.0 million, and (ii) the Company issued 1,125,000
shares (the “Commitment Shares”) of the Company’s common stock and warrants (the “Commitment Warrants”)
to purchase an equal number of shares, each subject to the terms and conditions set forth in the 2019 Purchase Agreement. The Debenture
accrues additional principal at the rate of 6% per annum and interest at the rate of 10% per annum, is convertible into shares of common
stock at $4.00 per share prior to the completion of the company’s planned public offering of units (the “Public Offering”)
or, subsequent to the closing of the Public Offering, the lower of $4.00 or 80% of the offering price per unit to the public in the Public
Offering and are mandatorily redeemable upon such closing at 100% of the accrued principal amount and unpaid interest to the date of redemption.
The Commitment Warrants are five-year warrants, exercisable upon the earlier of the effectiveness of the Company’s current reverse
stock split or December 1, 2019, at an amount equal to the lower of $4.00 or 80% of the offering price per unit to the public in the Public
Offering. Upon entering into the 2019 Purchase Agreement, the Company drew an initial $500,000 under the Debenture and in accordance with
the 2019 Purchase Agreement, Acuitas received an additional 125,000 warrants (the “Bridge Warrants”) having the same terms
as the Commitment Warrants. Any future draws under the Debenture, which may be made from and after
October 15, 2019, November 15, 2019 and December 15, 2019 in equal tranches of $500,000 each, will entitle Acuitas to receive additional
Bridge Warrants in equal amount upon such funding. In addition, the 2019 Purchase Agreement provides that, should the underwriters in
the Public Offering exercise their option to purchase additional securities during the 45 days following closing and the issuance of such
securities would result in Acuitas’ beneficial ownership (on a fully diluted basis) of shares of common stock being below 60%, Acuitas
shall be issued a number of additional shares of common stock and warrants having the same terms as the Commitment Warrants to result
in its beneficial ownership (on a fully diluted basis) of shares of common stock equaling 60%. The issuance of 1,125,000 shares of the Company’s commons stock and
warrants to purchase an equal amount number of shares, to its controlling stockholder for the Bridge Financing was accounted for as a
deemed dividend due to its related party nature and $17.1 million representing the excess of the fair value of the consideration given
for the financing, net of debt discount; was recorded in accumulated deficit for the year ended June 30, 2020, accordingly. A debt discount
of $500,000 against the debenture was recorded which will be amortized over the term of the debenture using the effective interest method. The Company received draws under the Debenture that totaled approximately
$1.3 million during the year ended June 30, 2020. The total interest expense related to the draws under the Debenture was approximately
$99,000 for the year ended June 30, 2020. On April 1, 2020, the Company entered an amendment to modify the payment of accrued interest
amounts under the original terms of the Debenture to capitalize all such amounts as would otherwise accrue on the Debenture. On January
4, 2020, payment of $13,487 accrued interest due was paid through the issuance of 4,422 shares of the Company’s common stock. Acuitas
and the Company continue to discuss the need and timing for some or all the remaining draws under the Debenture Agreement. Subsequent
to the initial $500,000 draw on September 24, 2019, the Company received draws that totaled $813,000 as July 13, 2020, and accordingly;
the Company issued additional Bridge Warrants to purchase 203,250 shares of common stock to its controlling stockholder under the terms
of the Bridge Financing. Accordingly, on April 16, 2020, the Company recorded the warrants to purchase 125,000 common stock related to
the second $500,000 draw under the debenture as a derivative warrant liability as of June 30, 2020. The Company recorded the warrants
related to the draws totaling $313,000 to purchase 78,250 common shares as derivative liabilities. Pursuant to the 2019 Purchase Agreement, Acuitas has agreed to further
modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that Acuitas’ previous agreement
in June 2019 to waive its rights to a 50% adjustment of the purchase price of the Preferred Stock in the July 2018 transaction, the exercise
price of the warrants in such transaction and the price per share in a Subsequent Sale in the event of certain reductions in the useful
life of our current intellectual property rights, and effectively exercise its rights to purchase securities in a Subsequent Sale pursuant
to a “cashless purchase” at an assumed current market price of approximately $11.25 per share, conditioned in each case on
the listing of the Company’s common stock on Nasdaq or the raising of $2.0 million in additional funds in the form of another securities
offering, in either case not later than November 30, 2019, such that Acuitas will have irrevocably waived its rights to an adjustment
in the purchase price of the Preferred Stock in the Initial Sale and the exercise price of the Warrants and the purchase price of per
share in the Subsequent Sale upon the issuance by us of an aggregate of 2,679,916 shares of common stock and 2,679,916 warrants having
the same terms as the Commitment Warrants to Acuitas, upon the closing of the Public Offering. Pursuant to an amendment to the 2019 Purchase Agreement dated October 9,
2019, Acuitas agreed to modify its existing rights under the 2019 Purchase Agreement so that:
- The Commitment Warrants (and related warrants issued upon the first draw under the Debenture) were replaced with warrants having similar terms, but which are automatically exercised upon the closing of the offering at an exercise price equal to the par value of the common stock;
- Acuitas’ existing rights under the Purchase Agreement dated July 3, 2018 with the Company were further amended so that the number of Subsequent Sale Shares would be multiplied by four (in lieu of the changes to the Purchase Agreement originally provided for in the 2019 Purchase Agreement); and
- The provisions of the 2019 Purchase Agreement providing that, should the underwriters in the offering exercise their option to purchase additional securities during the 45 days following closing and the issuance of such securities would result in Acuitas’ beneficial ownership (on a fully diluted basis) of shares of common stock being below 60%, Acuitas will be issued a number of additional shares of common stock and warrants having the same terms as the Commitment Warrants to result in its beneficial ownership (on a fully diluted basis) of shares of common stock equaling 60% have been modified such that, upon the exercise of such option by the underwriters, the Company will issue to Acuitas a number of securities that will result in Acuitas’ fully diluted beneficial ownership after the exercise of such option being the same as prior thereto. On July 14, 2020, the Company, entered into a further extension of its
letter agreements dated April 8, 2020, that furthered extended its letter agreement dated February 10, 2020 with Acuitas regarding Acuitas’
previous agreement to modify its existing rights under the Purchase Agreement dated July 3, 2018 with the Company so that its June 2019
waiver of its rights to a 50% adjustment of the purchase price applicable to its initial investment in the Company and the exercise price
of the warrants received in such transaction and the price per share should it exercise certain rights to purchase additional securities
in the event of certain reductions in the useful life of the Company’s intellectual property rights and commitment to purchase such
securities upon the closing of the Company’s planned public offering of shares of Class A common stock (the “Common Stock”)
as described in its Registration Statement on Form S-1 (File No. 333-231136) and commitment to purchase such additional securities would
remain effective until October 31, 2020, and accordingly Acuitas shall be entitled to receive an aggregate of 5,359,832 shares of Common
Stock at such closing. In addition, the parties agreed that certain draws under the Company’s current bridge financing with Acuitas
were to be made based with respect to the Company’s ongoing capital requirements and current market conditions, notwithstanding
certain scheduled availability dates set forth in the 10% OID Convertible Delayed Draw Debenture issued in connection therewith. The letter
agreement of July 14, 2020 also confirmed the understanding between the Company and Acuitas regarding certain amounts funded to BioVie
that were intended as “partial draws” of credit available under the Debenture which, as of the date hereof aggregated $813,000
in aggregate principal amount in additional to amounts initial funded under the Debenture. Accordingly, such “partial draws”
shall accrue additional principal as amounts otherwise funded pursuant to the original schedule of draws included in the Debenture (as
modified by the letter agreement between BioVie and Acuitas dated April 1, 2020 regarding the capitalization of interest otherwise payable)
and shall entitle Acuitas to receive a pro rata amount of Bridge Warrants. |
