Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
1.
|
Background Information
|
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 (continuous infusion terlipressin), a novel approach to the treatment
of ascites due to chronic liver cirrhosis. The Company began dosing patients with BIV201 in September 2017 at the McGuire Research
Institute Inc. in Richmond, VA. All six of the planned patients have been treated with BIV201 therapy in this Phase 2a clinical
trial. In May 2019, the Company announced that the primary study objectives to assess the safety, tolerability, and pharmacokinetics
(PK) of a continuous infusion of terlipressin over 28 days had been achieved. Detailed results will be presented to the Food &
Drug Administration (“FDA”) in the first half of 2019.
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 represents a significant unmet medical need. The FDA has never approved any drug specifically for treating ascites.
The Company has secured a US Patent covering the use of BIV201 for the treatment of ascites patients in the outpatient setting
using ambulatory pump infusion, and has filed patent applications for its product candidate in Japan, and Europe, Hong Kong, and
China. BIV201 also received Orphan Drug designation for hepatorenal syndrome (“HRS”) in November 2018.
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, Corp. (“PharmaIN”),
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. 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.’s rights to our program remain unchanged.
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.
|
Liquidity and Going Concern
|
The Company’s operations
are subject to a number of factors that can affect its operating results and financial conditions. Such factors include, but are
not limited to: the results of clinical testing and trial activities of the Company’s products, the Company’s ability
to obtain regulatory approval to market its products, competition from products manufactured and sold or being developed by other
companies, the price of, and demand for, Company products, the Company’s ability to negotiate favorable licensing or other
manufacturing and marketing agreements for its products, and the Company’s ability to raise capital. The Company’s
financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced losses since inception
and has an accumulated deficit of approximately $6.6 million at March 31, 2019. In addition, the Company has not generated any
revenues and no revenues are anticipated in the foreseeable future. The Company’s future operations are dependent on the
success of the Company’s ongoing development and commercialization efforts, as well as continuing to secure additional financing.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
2.
|
Liquidity and Going Concern (continued)
|
In July 2018, the Company completed a
capital raise from Acuitas Group Holdings, LLC (“Acuitas”) and other purchasers and received net proceeds of $3.2 million
and has resumed further clinical development of BIV201. The Acuitas investment agreement also stipulated that if the clinical development
of BIV201 continues, Acuitas may at its option invest up to an additional $3 million to fund operations in year two, less any federal
or FDA grant funding received by the Company.
The future viability of the Company
is largely dependent upon its ability to raise additional capital to finance its operations. Management expects that future sources
of funding may include sales of equity, obtaining loans, or other strategic transactions. Although management continues to pursue
these 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.
3.
|
Significant Accounting Policies
|
Basis of Presentation – Interim Financial Information
The accompanying unaudited interim
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 Exchange Commission 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 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, 2018 was derived from audited annual financial statements but does not contain
all the footnote disclosures from the annual financial statements. The accompanying financial statements and information included
under the heading: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should
be read in conjunction with our Company’s audited financial statements and related notes included in our Company’s
Form 10-K for the year ended June 30, 2018 filed with the SEC on October 5, 2018.
For a summary of significant accounting
policies, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018 filed with the SEC on October
5, 2018.
Net Loss per Common Share
Basic net loss per common share
is computed by dividing the net loss before deemed dividend by the weighted average number of shares of common stock outstanding
during the period. Diluted net loss per common share is computed by dividing net loss 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, convertible preferred stock
and convertible debentures. Due to the net loss for the period, such amounts were excluded from the diluted loss since their effect
was considered anti-dilutive.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
3.
|
Significant Accounting Policies (continued)
|
The table below shows the number
of outstanding stock options and warrants as of March 31, 2019 and June 30, 2018:
|
|
March 31, 2019
|
|
June 30, 2018
|
|
|
Number of Shares
|
|
Number of Shares
|
Stock Options
|
|
|
7,250,000
|
|
|
|
5,150,000
|
|
Warrants
|
|
|
216,440,548
|
|
|
|
4,774,015
|
|
Total
|
|
|
223,690,548
|
|
|
|
9,924,015
|
|
Recent accounting pronouncements
The Company considers the applicability
and impact of all Accounting Standard Updates (“ASU’s”). ASU’s not discussed below were assessed and determined
to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations.
In June 2018, the FASB issued ASU
2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Accounting”.
This guidance aligns the accounting for share-based payment transactions with non-employees to accounting for share-based payment
transactions with employees. Companies are required to record a cumulative-effect adjustment (net of tax) to retained earnings
as of the beginning of the fiscal year of the adoption. Upon transition, non-employee awards are required to be measured at fair
value as of the adoption date. This standard will be effective for fiscal years beginning December 15, 2018, including interim
periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on the
financial statements.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
4.
Intellectual Property
Intellectual
property, stated at cost, less accumulated amortization consists of the following:
|
|
March 31, 2019
|
|
June 30, 2018
|
|
|
|
|
|
Intellectual Property
|
|
$
|
2,293,770
|
|
|
$
|
2,293,770
|
|
Accumulated Amortization
|
|
|
681,823
|
|
|
|
509,790
|
|
Intellectual Property, Net
|
|
$
|
1,611,947
|
|
|
$
|
1,783,980
|
|
Amortization
expense for the three- and nine-month periods ended March 31, 2019 and 2018 was $57,344 and $172,033, respectively. Estimated future
amortization expense is as follows:
Year ending June 2019 (remaining three months)
|
$ 57,344
|
2020
|
229,377
|
2021
|
229,377
|
2022
|
229,377
|
2023
|
229,377
|
Thereafter
|
637,095
|
|
$ 1,611,947
|
5. Renegotiated Debt
On July 19, 2018, Geis-Hides Consulting
LLC entered into an Accord and Debt Satisfaction Agreement with the Company in which the consulting firm agreed to release the
Company from all liabilities arising from the Original Contract and Debt Repayment Plan dated December 15, 2013 totaling $132,000
and received cash of $65,000 and 260,000 common shares in satisfaction. The common shares were valued at the market price on the
date of settlement at $0.06 per common share. The gain of $51,400 on the settlement of debt was reflected on the Statements of
Operations as “other income” for the nine-month period ended March 31, 2019.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
6. Related Party Transactions
On July 9, 2018, Jonathan Adams
(COO) entered into an Accord and Debt Satisfaction Agreement with the Company in which he agreed to release the Company from all
liabilities including the original contract to defer payment of his accrued salary dated March 23, 2017, the promissory note issued
by the Company to defer payment of accrued salary; and subsequent unpaid salary, totaling the amount of $534,722, and received
cash of $25,694 in satisfaction. The gain of $509,028 on the settlement of debt was reflected in the additional paid in capital.
On July 9, 2018, Elliot Ehrlich
(former CEO and shareholder) entered into an Accord and Debt Satisfaction Agreement with the Company in which he agreed to release
the Company from all liabilities including the original contract to defer payment of accrued salary dated March 23, 2017, totaling
the amount of $222,028 the promissory note issued by the Company to defer payment of accrued salary; and received cash of $22,273
and 222,028 common shares in satisfaction. The common shares were valued at the market price on the date of settlement at $0.06
per common share. The gain of $186,503 on the settlement of debt was reflected in the additional paid in capital.
On August 8, 2018, Barrett Ehrlich
(Independent contractor, related party to Elliot Ehrlich and shareholder) on behalf of The Barrett Edge Inc. (“Barrett”)
entered into an Accord and Debt Satisfaction Agreement with the Company in which Barrett agreed to release the Company from all
liabilities including the original contract to defer payment of accrued consulting fees dated March 23, 2017, the promissory note
issued by the Company to defer payment of accrued consulting fees; loan to the Company for $14,000, and subsequent unpaid consulting
fees, totaling $543,014, and received cash of $131,333 and 493,333 common shares in satisfaction. The common shares were valued
at the market price on the date of settlement at $0.13 per common share. The gain of $361,548 on the settlement of debt was reflected
in the additional paid in capital.
See note 8 for other related party
transactions.
7. Commitments and Contingencies
Office Lease
On October 1, 2018, the Company
executed a lease agreement with Acuitas Group Holdings, LLC (related party) for the Company’s office at 11601 Wilshire Blvd
Ste 1100, Los Angeles, CA 90025. The lease is a month-to-month lease that may be cancelled upon 30 days’ written notice and
requires monthly payments of $1,000.
Challenge to US Patent
On April 30, 2018, the Company
received notice that Mallinckrodt Pharmaceuticals Ireland Limited had petitioned the US Patent and Trademark Office (USPTO) to
institute an Inter Partes Review of BioVie’s US 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.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
7. Commitments and Contingencies (continued)
On August 15, 2018, BioVie submitted
a Preliminary Response to the PTAB providing a rationale as to why, in the Company’s opinion, Mallinckrodt’s request
to institute the IPR should not be granted. On November 14, 2018, the PTAB granted institution of the IPR challenge after determining
that there was a reasonable likelihood of success in proving that at least one of the Company’s 14 claims was unpatentable.
On March 7, 2019, we submitted a Patent Owner’s Response and a Patent Owner’s Contingent-Motion to Amend our patent
claims, and Declaration of Dr. Jaime Bosch, MD, PhD, our medical expert. We are actively defending the ‘945 patent and may
explore the possibility of settlement with Mallinckrodt. However, there can be no assurance in that a favorable outcome will result,
or if settlement is reached that the PTAB will accept it. Although the PTAB encourages settlement, in view of public-interest considerations,
the board may continue the proceeding to a final written decision even if the parties settle. If the IPR is not terminated due
to settlement, the PTAB is statutorily required to issue its final written decision in this case before November 14, 2019. As of
March 31, 2019, no adjustments or accruals are reflected as the Company is unable to determine a likely outcome at this time.
Royalty Agreements
Pursuant to the Agreement and Plan
of Merger entered into on April 11, 2016 between 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.
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. 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.
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.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
8. Equity Transactions
Stock Options
The following table summarizes
the activity relating to the Company’s stock options for the nine months ended March 31, 2019:
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted Remaining Average Contractual Term
|
|
Aggregate Intrinsic Value
|
Outstanding at June 30, 2018
|
|
|
5,150,000
|
|
|
$
|
0.12
|
|
|
|
5.8
|
|
|
$
|
—
|
|
Granted
|
|
|
2,100,000
|
|
|
$
|
0.04
|
|
|
|
4.6
|
|
|
$
|
88,370
|
|
Options Exercised or Forfeited
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding at March 31, 2019
|
|
|
7,250,000
|
|
|
$
|
0.10
|
|
|
|
5.3
|
|
|
$
|
166,175
|
|
Exercisable at March 31, 2019
|
|
|
6,250,000
|
|
|
$
|
0.10
|
|
|
|
5.3
|
|
|
$
|
—
|
|
The fair value of each option grant
on the date of grant is estimated using the Black-Scholes Option – Pricing model reflecting the following weighted-average
assumptions:
|
|
March 31,
|
|
|
2019
|
|
2018
|
Expected life of options (In years)
|
|
|
5
|
|
|
|
5
|
|
Expected volatility
|
|
|
69.77
|
%
|
|
|
69.66
|
%
|
Risk free interest rate
|
|
|
2.60
|
%
|
|
|
1.59
|
%
|
Dividend Yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected volatility is based on
the historical volatilities of three comparable companies of the daily closing price of their respective common stock 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-based
compensation expense of $43,609 and $63,306 for the three-and nine-month periods ended March 31, 2019, respectively, and $152,062
and $191,835 for the three-and nine-month periods ended March 31, 2018, respectively.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
8. Equity Transactions (continued)
The fair value of options vested
during the nine-month period ended March 31, 2019 and 2018, was $10,235 and $25,281 respectively.
As of March 31, 2019, there was
approximately $1,555 of unrecognized compensation cost related to non-vested options granted which is expected to be recognized
over a weighted-average period of 1 months.
The following is a summary of stock
options outstanding and exercisable by exercise price as of March 31, 2019:
|
|
|
|
Weighted Average
|
|
|
Exercise Price
|
|
Outstanding
|
|
Contract Life
|
|
Exercisable
|
$
|
0.03
|
|
|
|
700,000
|
|
|
|
4.8
|
|
|
|
700,000
|
|
$
|
0.05
|
|
|
|
1,300,000
|
|
|
|
4.6
|
|
|
|
1,300,000
|
|
$
|
0.06
|
|
|
|
3,100,000
|
|
|
|
6.9
|
|
|
|
2,100,000
|
|
$
|
0.07
|
|
|
|
100,000
|
|
|
|
4.5
|
|
|
|
100,000
|
|
$
|
0.10
|
|
|
|
500,000
|
|
|
|
3.8
|
|
|
|
500,000
|
|
$
|
0.20
|
|
|
|
200,000
|
|
|
|
3.5
|
|
|
|
200,000
|
|
$
|
0.21
|
|
|
|
550,000
|
|
|
|
3.1
|
|
|
|
550,000
|
|
$
|
0.22
|
|
|
|
100,000
|
|
|
|
3.0
|
|
|
|
100,000
|
|
$
|
0.23
|
|
|
|
200,000
|
|
|
|
3.4
|
|
|
|
200,000
|
|
$
|
0.25
|
|
|
|
500,000
|
|
|
|
2.6
|
|
|
|
500,000
|
|
|
Total
|
|
|
|
7,250,000
|
|
|
|
|
|
|
|
6,250,000
|
|
Offerings of Common Stock and
Warrants
Issuance of Shares for Cash
On July 3, 2018, BioVie Inc.,
the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Acuitas Group Holdings, LLC
(“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 Company’s newly created 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) the Company will issue associated warrants (the “Warrants”) to purchase 213,333,200
shares of the Company’s Class A Common Stock (the “Common Stock”), each subject to the terms and conditions set
forth in the Purchase Agreement, for an aggregate consideration of $3.2 million. The Company received $160,000 of the $3.2 million
in April and May 2018 as prepaid equity. Acuitas also received an additional 833,333 Warrants in connection with the payoff of
a note issued by the Company in favor of Acuitas. The Initial Sale and issuance of the Warrants occurred on July 3, 2018. In addition,
Acuitas has the option to purchase up to an additional 200,000,000 shares of Common Stock at a price per share of $0.015, and associated
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 the Company has not obtained $3,000,000 of funding through various non-dilutive
grants prior to the one year anniversary of the closing of the Initial Sale.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
8. Equity Transactions (continued)
Each share of Preferred Stock automatically
converted into 100 shares of Common Stock upon the filing with the Secretary of State of the State of Nevada of a Certificate of
Amendment to the Company’s 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 the Company’s 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 the Company’s Definitive Information that
was filed with the Securities and Exchange Commission.
The purchase price of the Preferred
Stock in the Initial Sale, the exercise price of the Warrants, and the Common Stock in the Subsequent Sale is subject to adjustment.
In the event that Mallinckrodt Pharmaceuticals Ireland Limited prevails in any proceeding which results in the useful life of the
Company’s current intellectual property rights being reduced by more than 75 percent, then the price per share of Common
Stock, the associated conversion ratio of the Preferred Stock, and the exercise price of the Warrants shall be retroactively adjusted
to 50 percent of the then-effective price per share of Common Stock under the Purchase Agreement (for example, if the then-effective
price per share of Common Stock is $0.015, then following such event, the price per share will be $0.0075). In this case, the Company
may be required to issue additional shares of Common Stock, but in no event will the Company be required to pay cash, to reflect
such lower price per share.
The Purchase Agreement contained
customary representations and warranties. In connection with the disclosure schedule associated with the representations and warranties,
the Company also disclosed customary information, including the following: (i) the existence of the Mallinckrodt Pharmaceuticals
Ireland Limited petition before the US Patent Trial and Appeal Board, (ii) the current capitalization of the Company, (iii) the
Company’s 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 the Company, (iv) the Company’s 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 the Company and the University of Padova (Italy), and (v)
certain recent issuances of Common Stock by the Company.
Pursuant to the Purchase Agreement,
Terren Peizer, the Chairman of Acuitas, was appointed as a member of the Company’s Board of Directors (the “Board”)
and as the Chief Executive Officer of the Company, effective July 3, 2018. The issuance of the Preferred Stock, the Warrants and
the underlying common stock under the Purchase Agreement is exempt from registration under the Securities Act of 1933, as amended
(the “Securities Act”), pursuant to the exemption for transactions by an issuer not involving any public offering under
Section 4(a)(2) of the Securities Act.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
8. Equity Transactions (continued)
Issuance of Shares for Services
On January 2, 2019, the Company
issued 1,400,000 shares of common stock as part of the annual board of director compensation. The share price on date of issuance
was $0.035 per share.
Issuance of Shares in Settlement
of Debt
During the nine months ended March
31, 2019, the Company settled $1,475,765 of debt including $1,313,765 owed to related parties, by issuing 975,361 shares of common
stock with a fair value of $1,150,135. See notes 5 and 6.
Issuance of Stock Options
On October 1, 2018, the Company
issued stock options to purchase 100,000 shares of common stock to the Chief Financial Officer as part of her compensation. The
stock options were issued and are exercisable at an exercise price of $0.07 at any time from date of issuance and expire in 5 years
from the date of issuance.
On October 13, 2018, the Company
issued stock options to purchase 100,000 shares of common stock as part of their annual board of director compensation. The stock
options were issued and are exercisable at $0.05 at any time from date of issuance and expire in 5 years from the date of issuance.
On October 27, 2018, the Company
issued stock options to purchase 100,000 shares of common stock as part of their annual board of director compensation. The stock
options were issued and are exercisable at $0.05 at any time from date of issuance and expire in 5 years from the date of issuance
On November 10, 2018, the Company
issued stock options to purchase 100,000 shares of common stock as part of their annual board of director compensation. The stock
options are exercisable at an exercise price of $0.05 at any time from date of issuance and expire in 5 years from the date of
issuance.
On January 19, 2019, the Company
issued stock options to purchase 100,000 shares of common stock to each of five key employees or consultants and two company directors
as part of his or her annual compensation, for an aggregate total of 700,000 stock options. The stock options are exercisable at
an exercise price of $0.025 at any time from date of issuance until 5 years from the date of issuance.
On March 11, 2019, the Company
issued stock options to purchase 1,000,000 shares of common stock to an investor relations (IR) consultant. The stock options were
issued and are exercisable at $0.05 at any time from date of issuance and expire in 5 years from the date of issuance.
Cashless exercise of warrant
On August 4, 2018, the Company
issued 2,241,913 shares of common stock pursuant to a cash less exercise of warrants to purchase 2,500,000 shares at an exercise
price of $0.015 per share. As a result of the conversion of the Series A Preferred Stock in July 2018, the exercise of warrants
to purchase 2,500,000 shares of common stock was reduced from $0.15 per share to $0.015 per share.
BIOVIE INC.
Notes to Condensed Financial Statements
For the Nine Months Ended March 31,
2019 and 2018
(unaudited)
8. Equity Transactions (continued)
Warrant Price Adjustment
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 warrants were exercisable at an exercise price of $0.20 at any time from date of issuance until 7 years from the date of issuance.
The warrants have a down round feature that reduces the exercise price if the Company sells stock for a lower price. In January
2018, the Company sold shares at $0.15, which therefore triggered the reduction in the strike price. The Company calculated the
difference in fair value of the warrants between the stated exercise price and the reduced exercise price and recorded $20,995
as a deemed dividend. In July 2018, the Company sold shares at $0.015, which therefore triggered the reduction in the strike price.
The Company calculated the difference in fair value of the warrants between the stated exercise price and the reduced exercise
price and recorded $44,889 as a deemed dividend. The fair value of the warrants granted was estimated using the Black Scholes Method.
In January 2018, the Company issued
warrants to purchase 210,000 shares of common stock in exchange for banking services which was recognized at fair value. The warrants
were exercisable at an exercise price of $0.15 at any time from date of issuance until 7 years from the date of issuance. The warrants
have a down round feature that reduces the exercise price if the Company sells stock for a lower price. In July 2018, the Company
sold shares at $0.015, which therefore triggered the reduction in the strike price. The Company calculated the difference in fair
value of the warrants between the stated exercise price and the reduced exercise price and recorded $3,770 as a deemed dividend.
The fair value of the warrants granted was estimated using the Black Scholes Method.
The following table summarizes
the warrants that have been issued:
|
|
|
|
Weighted
|
|
Weighted Average
|
|
Aggregate
|
|
|
Number of Shares
|
|
Average Exercise Price
|
|
Remaining Life (Years)
|
|
Intrinsic Value
|
Outstanding at June 30, 2018
|
|
|
4,774,015
|
|
|
$
|
0.29
|
|
|
|
5.5
|
|
|
$
|
—
|
|
Granted
|
|
|
214,166,533
|
|
|
$
|
0.02
|
|
|
|
5.3
|
|
|
$
|
14,284,908
|
|
Expired
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
|
|
(2,500,000
|
)
|
|
$
|
0.02
|
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding and exercisable at March 31, 2019
|
|
|
216,440,548
|
|
|
$
|
0.03
|
|
|
|
5.3
|
|
|
$
|
14,284,908
|
|
Of the above warrants, 1,173,864 expire
in fiscal year ending June 30, 2022, 556,818 expire in fiscal year ending June 30, 2023, and 214,709,866 expire in fiscal year
ending June 30, 2025.
9. Subsequent Events
In April 2019, to facilitate
the Company’s planned uplisting to the NASDAQ Stock Market and related potential future issuances and sales of equity securities
for ordinary corporate finance and general corporate purposes and as recommended by the Board of Directors (“Board”),
the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to effect a reverse split
of its outstanding Class A common stock in the range of 50:1 to 200:1, as determined by the Board. Following that approval, the
Company filed a Registration Statement on Form S-1 (Registration No. 333-231136) (the “S-1 Registration Statement”)
pursuant to which it anticipates completing an offering of equity securities with proceeds sufficient to enable the launch and
completion of the BIV201 Phase 2b study and fund internal operations for at least the next twelve months.