UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2021

 

or

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File Number: 000-54878

 

PROPANC BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   33-0662986

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

302, 6 Butler Street

Camberwell, VIC, 3124 Australia

(Address of principal executive offices) (Zip Code)

 

61 03 9882 6723

(Registrant’s telephone number, including area code)

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   None   None

 

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 preceding 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 [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [X] Smaller reporting company [X]
    Emerging growth company [  ]

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As of May 14, 2021, there were 5,967,110 shares of the registrant’s common stock, $0.001 par value per share, issued and outstanding.

 

 

 

   
   

 

PROPANC BIOPHARMA INC.

 

Table of Contents

 

    Page
PART I - FINANCIAL INFORMATION  
     
Item 1. Financial Statements F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
     
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 12
Item 1A. Risk Factors 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Mine Safety Disclosures 13
Item 5. Other Information 13
Item 6. Exhibits 13
  Signatures 14

 

 2 
   

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Unless expressly indicated or the context requires otherwise, the terms “Propanc,” “company,” “we,” “us,” and “our” in this document refer to Propanc Biopharma, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiary.

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

The following unaudited interim condensed consolidated financial statements of Propanc Biopharma, Inc. are included in this Quarterly Report on Form 10-Q:

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
Condensed Consolidated Balance Sheets at March 31, 2021(unaudited) and June 30, 2020 F-2
   
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended March 31, 2021 and 2020 (unaudited) F-3
   
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for each of the three and nine months in the period ended March 31, 2021 and 2020 (unaudited) F-4
   
Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2021 and 2020 (unaudited) F-6
   
Notes to the condensed consolidated financial statements (unaudited) F-7

 

 F-1 
   

 

PROPANC BIOPHARMA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

         
   March 31, 2021   June 30, 2020 
    (Unaudited)      
ASSETS          
           
CURRENT ASSETS:          
Cash  $14,439   $67,007 
GST tax receivable   4,079    2,015 
           
TOTAL CURRENT ASSETS   18,518    69,022 
           
Security deposit - related party   2,285    2,067 
Operating lease right-of-use assets, net - related party   2,397    21,682 
Property and equipment, net   4,843    5,747 
           
TOTAL ASSETS  $28,043   $98,518 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES:          
Accounts payable  $950,131   $842,156 
Accrued expenses and other payables   556,054    702,231 
Convertible notes and related accrued interest, net of discounts and premiums   950,180    1,557,734 
Operating lease liability - related party   7,833    25,072 
Embedded conversion option liabilities   53,189    177,009 
Due to former director - related party   33,867    30,639 
Loans from directors and officer - related parties   56,366    50,993 
Employee benefit liability   424,101    354,109 
           
TOTAL CURRENT LIABILITIES   3,031,721    3,739,943 
           
TOTAL LIABILITIES  $3,031,721   $3,739,943 
           
Commitments and Contingencies (See Note 8)          
           
STOCKHOLDERS’ DEFICIT:          
Preferred stock, 1,500,005 shares authorized, $0.01 par value:          
Series A preferred stock, $0.01 par value; 500,000 shares authorized; 500,000 shares issued and outstanding as of March 31, 2021 and June 30, 2020  $5,000   $5,000 
Series B preferred stock, $0.01 par value; 5 shares authorized; 1 share issued and outstanding as of March 31, 2021 and June 30, 2020   -    - 
Common stock, $0.001 par value; 1,000,000,000 shares authorized;4,968,824 and 258,120 shares issued and outstanding as of March 31, 2021 and June 30, 2020, respectively   4,969    258 
Common stock issuable (130,098 and 0 shares as of March 31, 2021 and June 30, 2020, respectively)   130    - 
Additional paid-in capital   53,007,522    50,913,893 
Accumulated other comprehensive income   1,053,874    1,267,671 
Accumulated deficit   (57,028,696)   (55,781,770)
Treasury stock (1 share)   (46,477)   (46,477)
           
TOTAL STOCKHOLDERS’ DEFICIT   (3,003,678)   (3,641,425)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $28,043   $98,518 

 

The accompanying unaudited condensed notes are an integral part of these unaudited condensed consolidated financial statements.

 

 F-2 
   

  

PROPANC BIOPHARMA, INC. AND SUBSIDIARY  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

  

Three Months Ended

March 31,

  

Nine Months Ended

March 31,

 
   2021   2020   2021   2020 
                 
REVENUE                    
Revenue  $-   $-   $-   $- 
                     
OPERATING EXPENSES                    
Administration expenses   373,834    542,093    913,124    2,751,478 
Occupancy expenses   9,231    7,591    26,185    25,815 
Research and development   44,887    57,484    145,898    122,893 
TOTAL OPERATING EXPENSES   427,952    607,168    1,085,207    2,900,186 
                     
LOSS FROM OPERATIONS   (427,952)   (607,168)   (1,085,207)   (2,900,186)
                     
OTHER INCOME (EXPENSE)                    
Interest expense   (102,901)   (384,804)   (420,017)   (1,506,111)
Interest income   -    137    1    143 
Change in fair value of derivative liabilities   (55,158)   454,442    (7,156)   298,374 
Gain from settlement of debt, net   48,390    -    48,390    - 
Gain on extinguishment of debt, net   622    60,835    50,607    81,011 
Foreign currency transaction gain (loss)   6,984    (2,135,421)   54,179    (2,053,010)
TOTAL OTHER EXPENSE, NET   (102,063)   (2,004,811)   (273,996)   (3,179,593)
                     
LOSS BEFORE TAXES   (530,015)   (2,611,979)   (1,359,203)   (6,079,779)
                     
Tax benefit   112,277    26,317    112,277    135,068 
                     
NET LOSS  $(417,738)  $(2,585,662)  $(1,246,926)  $(5,944,711)
                     
BASIC AND DILUTED NET LOSS PER SHARE  $(0.12)  $(348.75)  $(0.76)  $(1,794.90)
                     
BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING   3,452,810    7,414    1,631,175    3,312 
                     
NET LOSS  $(417,738)  $(2,585,662)  $(1,246,926)  $(5,944,711)
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Unrealized foreign currency translation gain (loss)   29,723    2,281,569    (213,797)   2,215,762 
                     
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)   29,723    2,281,569    (213,797)   2,215,762 
                     
TOTAL COMPREHENSIVE LOSS  $(388,015)  $(304,093)  $(1,460,723)  $(3,728,949)

 

The accompanying unaudited condensed notes are an integral part of these unaudited condensed consolidated financial statements.

 

 F-3 
   

 

PROPANC BIOPHARMA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR EACH OF THE THREE AND NINE MONTHS ENDED MARCH 31, 2021 and 2020

(Unaudited)

 

 

  

Preferred Stock

     

Common Stock

           Accumulated         
   Series A   Series B   Common Stock  

Issuable

   Additional       Other       Total 
   No. of Shares   Value   No. of Shares   Value   No. of Shares   Value   No. of Shares   Value   Paid-in Capital   Accumulated Deficit   Comprehensive Income   Treasury Stock   Stockholders’ Deficit 
                                                     
                                                     
Balance at June 30, 2019     500,000   $  5,000       1   $    -    968   $1                 -   $       -   $  45,714,289   $  (51,041,047)  $1,066,998   $  (46,477)  $(4,301,236)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    182    -    -    -    123,713    -    -    -    123,713 
                                                                  
Reclassification of put premium upon debt conversion   -    -    -    -    -    -    -    -    73,235    -    -    -    73,235 
                                                                  
Relative fair value of warrants issued with convertible debt   -    -    -    -    -    -    -    -    375,905    -    -    -    375,905 
                                                                  
Issuance of common stock for services   -    -    -    -    20    -    -    -    39,800    -    -    -    39,800 
                                                                  
Stock based compensation in connection with stock option grants and restricted stock unit grants   -    -    -    -    -    -    -    -    75,104    -    -    -    75,104 
                                                                  
Foreign currency translation gain   -    -    -    -    -    -    -    -    -    -    563,687    -    563,687 
                                                                  
Net loss for the three months ended September 30, 2019   -    -    -          -    -    -    -    -    -    (1,491,940)   -    -    (1,491,940)
                                                                  
Balance at September 30, 2019   500,000    5,000    1    -    1,170    1    -    -    46,402,046    (52,532,987)   1,630,685    (46,477)   (4,541,732)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    1,065    1    -    -    219,465    -    -    -    219,466 
                                                                  
Reclassification of put premium upon debt conversion   -    -    -    -    -    -    -    -    86,970    -    -    -    86,970 
                                                                  
Stock based compensation in connection with stock option grants and restricted stock unit grants   -    -    -    -    -    -    -    -    75,104    -    -    -    75,104 
                                                                  
Stock based compensation in connection with fair value of warrants issued for services   -    -    -    -    -    -    -    -    984,810    -    -    -    984,810 
                                                                  
Foreign currency translation gain   -    -    -    -    -    -    -    -    -    -    (629,494)   -    (629,494)
                                                                  
Net loss for the three months ended December 31, 2019   -    -    -        -    -    -    -     -    -    (1,867,109)   -    -    (1,867,109)
                                                                  
Balance at December 31, 2019   500,000    5,000    1    -    2,234,901    2,235    -    -    47,768,395    (54,400,096)   1,001,191    (46,477)   (5,671,985)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    16,096,509    16,096              793,989    -    -    -    810,085 
                                                                  
Reclassification of put premium upon debt conversion   -    -    -    -    -    -              222,981    -    -    -    222,981 
                                                                  
Issuance of common stock for services   -    -    -    -    150,000    150              20,850    -    -    -    21,000 
                                                                  
Stock based compensation in connection with stock option grants and restricted stock unit grants   -    -    -    -    -    -              75,104    -    -    -    75,104 
                                                                  
Foreign currency translation gain   -    -    -    -    -    -              -    -    2,281,569    -    2,281,569 
                                                                  
Net loss for the three months ended March 31, 2020   -    -    -    -    -    -    -    -    -    (2,585,662)   -    -    (2,585,662)
                                                                  
Balance at March 31, 2020   500,000   $5,000    1   $-      18,481,410   $  18,481    -   $-   $48,879,086   $(56,985,758)  $3,282,760   $(46,477)  $(4,846,908)

 

The accompanying unaudited condensed notes are an integral part of these unaudited condensed consolidated financial statements.

 

 F-4 
   

 

PROPANC BIOPHARMA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR EACH OF THE THREE AND NINE MONTHS ENDED MARCH 31, 2021 and 2020

(Unaudited)

 

 

   Preferred Stock     

Common Stock

           Accumulated         
   Series A   Series B   Common Stock   Issuable   Additional       Other       Total 
   No. of Shares   Value   No. of Shares   Value   No. of Shares   Value   No. of Shares   Value   Paid-in Capital   Accumulated Deficit  

Comprehensive

Income

   Treasury Stock   Stockholders’ Deficit 
                                                     
                                                     
Balance at June 30, 2020     500,000   $  5,000         1   $    -    258,120   $258    -   $-   $  50,913,893   $  (55,781,770)  $1,267,671   $  (46,477)  $(3,641,425)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    442,031    442    -    -    480,133    -    -    -    480,575 
                                                                  
Reclassification of put premium upon debt conversion   -    -    -    -    -    -    -    -    204,919    -    -    -    204,919 
                                                                  
Issuance of common stock for exercise of warrants   -    -    -    -    15,445    15    -    -    201,029    -    -    -    201,044 
                                                                  
Stock based compensation in connection with stock option grants   -    -    -    -    -    -    -    -    20,718    -    -    -    20,718 
                                                                  
Foreign currency translation loss   -    -    -    -    -    -    -    -    -    -    (75,755)   -    (75,755)
                                                                  
Net loss for the three months ended September 30, 2020   -    -    -    -    -    -    -    -    -    (425,545)   -    -    (425,545)
                                                                  
Balance at September 30, 2020   500,000    5,000    1    -    715,596    715    -    -    51,820,692    (56,207,315)   1,191,916    (46,477)   (3,235,469)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    702,623    703    -    -    141,126    -    -    -    141,829 
                                                                  
Reversal of common stock issuable due to cancellation of conversions of convertible debt and accrued interest   -    -    -    -    (24,427)   (24)   -    -    (19,992)   -    -    -    (20,016)
                                                                  
Reversal of put premium upon cancellation of conversions of convertible debt   -    -    -    -    -    -    -    -    (11,785)   -    -    -    (11,785)
                                                                  
Reclassification of put premium upon debt conversion   -    -    -    -    -    -    -    -    68,090    -    -    -    68,090 
                                                                  
Issuance of common stock for cashless exercise of warrants   -    -    -    -    52,900    53    147,099    147    (200)   -    -    -    - 
                                                                  
Stock based compensation in connection with stock option grants   -    -    -    -    -    -    -    -    20,718    -    -    -    20,718 
                                                                  
Vested restricted stock units   -    -    -    -    -    -    59    -    -    -    -    -    - 
                                                                  
Foreign currency translation loss   -    -    -    -    -    -    -    -    -    -    (167,765)   -    (167,765)
                                                                  
Fractional difference due to the reverse stock-split   -    -    -    -    142    -    -    -    -    -    -    -    - 
                                                                  
Net loss for the three months ended December 31, 2020   -    -    -    -    -    -    -    -    -    (403,643)   -    -    (403,643)
                                                                  
Balance at December 31, 2020   500,000    5,000    1    -    1,446,834    1,447    147,158    147    52,018,649    (56,610,958)   1,024,151    (46,477)   (3,608,041)
                                                                  
Issuance of common stock for conversion of convertible debt and accrued interest   -    -    -    -    2,341,733    2,342    130,039    130    389,328    -    -    -    391,800 
                                                                  
Issuance of common stock for services   -    -    -    -    225,037