Quarterly report pursuant to Section 13 or 15(d)

DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

6 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

NOTE 11 - DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments:

The Company applies the provisions of ASC 815-40, Contracts in Entity’s Own Equity, under which convertible instruments and warrants, which contain terms that protect holders from declines in the stock price (reset provisions), may not be exempt from derivative accounting treatment. As a result, warrants and embedded conversion options in convertible debt are recorded as a liability and are revalued at fair value at each reporting date. If the fair value of the warrants exceeds the face value of the related debt, the excess is recorded as change in fair value in operations on the issuance date. The Company had $138,500 (2 notes) and $75,300 (2 notes) of convertible debt, which were treated as derivative instruments outstanding at December 31, 2023 and June 30, 2023, respectively.

The Company calculates the estimated fair values of the liabilities for derivative instruments using the Binomial Trees Method. The closing price of the Company’s common stock at December 31, 2023, the last trading day of the period ended December 31, 2023, was $0.012. The volatility, expected remaining term and risk-free interest rates used to estimate the fair value of derivative liabilities at December 31, 2023 are indicated in the table that follows. The expected term is equal to the remaining term of the warrants or convertible instruments and the risk-free rate is based upon rates for treasury securities with the same term.

Convertible Debt

	Initial Valuations (on new derivative instruments entered into during the six months ended December 31, 2023)		December 31, 2023
Volatility		327.58 – 333.45%		341.84	%
Expected Remaining Term (in years)		0.50		0.01 - 0.28
Risk Free Interest Rate		5.43 - 5.55%		5.40	%
Expected dividend yield		None		None

Fair Value Measurements:

The Company measures and reports at fair value the liability for derivative instruments. The fair value liabilities for price adjustable warrants and embedded conversion options have been recorded as determined utilizing the Binomial Trees model. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and June 30, 2023:

	Balance at December 31, 2023		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
				(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liabilities	$	219,045	$	—	$	—	$	219,045
Total	$	219,045	$	—	$	—	$	219,045

	Balance at June 30, 2023		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
				(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liabilities	$	423,209	$	—	$	—	$	423,209
Total	$	423,209	$	—	$	—	$	423,209

PROPANC BIOPHARMA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

(Unaudited)

The following is a roll forward for the six months ended December 31, 2023 of the fair value liability of price adjustable derivative instruments:

	Fair Value of
	Liability for
	Derivative
	Instruments
Balance at June 30, 2023	$	423,209
Beginning balance	$	423,209
Initial fair value of embedded conversion option derivative liability recorded as debt discount		125,000
Initial fair value of embedded conversion option derivative liability recorded as derivative expense		123,379
Reduction of derivative liability upon debt conversion		(150,385	)
Change in fair value included in statements of operations		(302,158	)
Balance at December 31, 2023	$	219,045
Ending balance	$	219,045