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, expenses and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) product development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

Management's Discussion

BioVie is a clinical-stage company pursuing the discovery, development, and commercialization of innovative drug 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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Comparison of the three months ended December 31, 2019 to the three months ended December 31, 2018





Net income (loss)

The net income for the three months ended December 31, 2019 was $6.7 million as compared to a net loss of $501,000 for the three months ended December 31, 2018. The increase in net income (loss) of $7.2 million was due to a decrease in fair value of derivative liabilities of approximately $7.4 million offset by an increase in operating expenses of approximately $210,000. The change in the fair value of derivative liabilities was due to a decrease in the Company's stock price.

Total operating expenses for the three months ended December 31, 2019 were approximately $710,000 compared to $501,000 for the three months ended December 31, 2018. The net increase of approximately $209,000 was primarily due to activities related to the Phase 2a clinical trials wrap up and preparation of the protocols for the Phase 2b/3 trials during the three months ended December 31, 2019 and an increase in selling, general and administrative expenses.

Research and Development Expenses

Research and development expenses were approximately $347,000 for the three months ended December 31, 2019, an increase of $141,000, from $206,000 for the three months ended December 31, 2018. The increase was primarily attributed to the wrapping up of the phase 2a clinical trials and readying for the next phase of trials including the preparing the protocols and manufacturing of the prefilled syringe which may be used in the next phase of trials subject to FDA clearance.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were approximately $307,000 for the three months ended December 31, 2019, a net increase of approximately $69,000, from $238,000 for the three months ended December 31, 2018. The net increase was primarily attributed to an increase in the insurance premiums of approximately $73,000 for increased coverage.

Comparison of the six months ended December 31, 2019 to the six months ended December 31, 2018





Net income (loss)

The net income for the six months ended December 31, 2019 was $2.8 million as compared to a net loss of $940,000 for the six months ended December 31, 2018. The increase in net income of $3.8 million was due to a decrease in fair value of derivative liabilities of $7.8 million offset by an increase in operating expenses of $424,000 and increase in interest expense of $3.5 million related to the embedded derivative liability warrants. The change in the fair value of derivative liabilities was due to a decrease in the Company's stock price.

Total operating expenses for the six months ended December 31, 2019 were approximately $1.4 million compared to $992,000 for the six months ended December 31, 2018. The net increase of approximately $424,000 was primarily due to activities related to the Phase 2a clinical trials wrap up and preparation of the protocols for the Phase 2b/3 trials during the six months ended December 31, 2019 and an increase in selling, general and administrative expenses.

Research and Development Expenses

Research and development expenses were approximately $688,000 for the six months ended December 31, 2019, an increase of $287,000, from $401,000 for the six months ended December 31, 2018. The increase was primarily attributed to the wrapping up of the phase 2a clinical trials and readying for the next phase of trials including the preparing the protocols and manufacturing of the prefilled syringe which may be used in the next phase of trials subject to FDA clearance.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were approximately $614,000 for the six months ended December 31, 2019, a net increase of approximately $137,000, from $477,000 for the six months ended December 31, 2018. The net increase was primarily attributed to an increase in the insurance premiums of approximately $88,000 for increased coverage, increased payroll of approximately $30,000 due the hiring of a half time chief financial officer that joined in October 2018 and other expenses of approximately $19,000 related to activities of the Company's capital raise and up listing to the Nasdaq.


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Capital Resources and Liquidity

At December 31, 2019 the Company had approximately $3,000 in cash and had completed its Phase 2a clinical trial of the BIV201 therapy. On September 24, 2019, the Company entered into a Securities Purchase Agreement with its controlling stockholder regarding bridge financing (the "Bridge Financing") in the form of up to $2.0 million in convertible debt and warrants, of which $750,000 has been drawn to date. Amounts borrowed under the Bridge Financing must be repaid with the proceeds of our potential public offering of equity securities referred to below. The availability of additional draws under the Bridge Financing is under discussion with Acuitas in light of delays in the timing of the potential public offering. As further discussed below, the Company is pursuing various options to raise further financing to continue the testing and development of its product. If the Company is not successful in raising additional funds it may reduce its monthly spend and potentially delay the implementation of the larger scale Phase 2b Clinical trial until sufficient funding is secured. On January 3, 2020, Acuitas provided the Company a short-term interest free advance of $20,000. The short-term advance along with the $30,000 advances in December 2019 were rolled into the partial draw number 2 of $250,000 received on January 14, 2020.

As of December 31, 2019, the Company had an accumulated deficit of approximately $21.5 million and as a development stage enterprise, the Company expects substantial losses in future periods. The accompanying interim financial statements were prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's future operations are dependent on the success of the Company's ongoing development and commercialization effort, as well as continuing to secure additional financing.

We cannot assure you that our drug candidate will be developed, work, or receive regulatory approval; that we will ever earn revenues sufficient to support our operations or that we will ever be profitable. Furthermore, since we have no committed source of sufficient financing, we cannot assure 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.

Additionally, in April 2019, to facilitate our planned up listing to the NASDAQ Stock Market and related potential future issuances and sales of our equity securities for ordinary corporate finance and general corporate purposes and as recommended by our Board of Directors ("Board"), our stockholders approved an amendment to our Articles of Incorporation to effect a reverse split of our outstanding Class A common stock in the range of 50:1 to 200:1, as determined by our Board. On November 22, 2019, the Company effected a reverse stock split of 125 common stock for every 1 common stock. All share amounts have been updated to reflect the reverse stock split.

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.

These circumstances raise substantial doubt on our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.



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Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company's financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Critical Accounting Policies and Estimates

For the six-month period ended December 31, 2019, there were no significant changes to the Company's critical accounting policies as identified in the Annual Report Form 10-K for the fiscal year ended June 30, 2019.

New Accounting Pronouncements

The Company considered the applicability and impact of recent accounting pronouncements and determined those to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations.

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