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
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
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 |