Propanc Biopharma, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. The following audited consolidated financial statements of Propanc Biopharma, Inc. are included in this Annual Report: 25 PROPANC BIOPHARMA, INC. INDEX TO FINANCIAL STATEMENTS Page Audited Consolidated Financial Statements for the Fiscal Years Ended June 30, 2021 and 2020 Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of June 30, 2021 and 2020 F-4 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2021 and 2020 F-5 Consolidated Statements of Changes in Stockholders’ Deficit for the years ended June 30, 2021 and 2020 F-6 Consolidated Statements of Cash Flows for the years ended June 30, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders’ and the Board of Directors of: Propanc Biopharma, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets Propanc Biopharma, Inc. and Subsidiary (the “Company”) as of June 30, 2021 and 2020, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ deficit, and cash flows, for each of the two years in the period ended June 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has a net loss of $2,025,947 and net cash used in operating activities of $1,145,264 for the fiscal year ended June 30, 2021. The Company has a working capital deficit, stockholder’s deficit, and accumulated deficit of $3,074,078, $3,067,573, and $58,199,466 respectively, at June 30, 2021. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan regarding these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 2295 NW Corporate Blvd., Suite 240 • Boca Raton, FL 33431-7328 Phone: (561) 995-8270 • Toll Free: (866) CPA-8500 • Fax: (561) 995-1920 www.salbergco.com • info@salbergco.com Member National Association of Certified Valuation Analysts • Registered with the PCAOB Member CPAConnect with Affiliated Offices Worldwide • Member AICPA Center for Audit Quality F- 2 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Derivative Liabilities As described in Footnote 12 “Derivative Financial Instruments and Fair Value Measurements” to the consolidated financial statements, the Company recorded derivative transactions that resulted primarily in a net derivative expense from change in fair value of conversion option liability of $8,186, and derivative liabilities of $54,220 at June 30, 2021. We identified the evaluation of instruments and contracts to determine whether there are derivatives to be recorded, the analysis of the accounting treatment and presentation for derivative transactions and the valuation of derivatives as critical audit matters. Auditing management’s analysis of the above critical audit matters was complex and involved a high degree of subjectivity. The primary procedures we performed to address these critical audit matters included (a) Reviewed and tested management’s conclusions as to whether certain instruments or contracts qualified for derivative treatment by comparing management’s analysis and conclusions to authoritative and interpretive literature, (b) Compared the accounting treatment and presentation to that described by the authoritative and interpretive literature, (c) Tested management’s process for valuing derivatives by comparing it to generally accepted methodologies for valuing derivatives, (d) Tested management’s valuation of the derivatives by testing assumptions and data used in the valuation model including the term, volatility and interest rate, and (e) Recomputed the derivative valuations. /s/Salberg & Company, P.A. SALBERG & COMPANY, P.A. We have served as the Company’s auditor since 2011 Boca Raton, Florida September 28, 2021 F- 3 PROPANC BIOPHARMA, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS June 30, 2021 June 30, 2020 ASSETS CURRENT ASSETS: Cash $ 2,255 $ 67,007 GST tax receivable 4,341 2,015 TOTAL CURRENT ASSETS 6,596 69,022 Security deposit - related party 2,250 2,067 Operating lease right-of-use assets, net - related party - 21,682 Property and equipment, net 4,255 5,747 TOTAL ASSETS $ 13,101 $ 98,518 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES: Accounts payable $ 1,002,335 $ 842,156 Accrued expenses and other payables 892,151 702,231 Convertible notes and related accrued interest, net of discounts and premiums 624,583 1,557,734 Operating lease liability - related party - 25,072 Embedded conversion option liabilities 54,220 177,009 Due to former director - related party 33,347 30,639 Loan from former director - related party 55,500 50,993 Employee benefit liability 418,538 354,109 TOTAL CURRENT LIABILITIES 3,080,674 3,739,943 TOTAL LIABILITIES $ 3,080,674 $ 3,739,943 Commitments and Contingencies (See Note 9) - 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 June 30, 2021 and 2020 $ 5,000 $ 5,000 Series B preferred stock, $ 0.01 par value; 5 shares authorized; 1 share issued and outstanding as of June 30, 2021 and 2020 - - Preferred stock value Common stock, $ 0.001 par value; 1,000,000,000 shares authorized; 14,055,393 and 258,120 shares issued and outstanding as of June 30, 2021 and 2020, respectively 14,056 258 Common stock issuable ( 59 and 0 shares as of June 30, 2021 and 2020, respectively) - - Additional paid-in capital 54,074,110 50,913,893 Accumulated other comprehensive income 1,085,204 1,267,671 Accumulated deficit ( 58,199,466 ) ( 55,781,770 ) Treasury stock (1 share) ( 46,477 ) ( 46,477 ) TOTAL STOCKHOLDERS’ DEFICIT ( 3,067,573 ) ( 3,641,425 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 13,101 $ 98,518 The accompanying notes are an integral part of these consolidated financial statements. F- 4 PROPANC BIOPHARMA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 2021 2020 Years Ended June 30, 2021 2020 REVENUE Revenue $ - $ - OPERATING EXPENSES Administration expenses 1,553,075 3,281,464 Occupancy expenses 28,112 32,809 Research and development 230,956 179,987 TOTAL OPERATING EXPENSES 1,812,143 3,494,260 LOSS FROM OPERATIONS ( 1,812,143 ) ( 3,494,260 ) OTHER INCOME (EXPENSE) Interest expense ( 449,457 ) ( 1,748,381 ) Interest income 1 946 Other income - 57,636 Change in fair value of derivative liabilities ( 8,186 ) 385,293 Gain from settlement of debt, net 49,319 - Gain on extinguishment of debt, net 50,607 67,123 Foreign currency transaction gain (loss) 30,497 ( 143,808 ) TOTAL OTHER EXPENSE, NET ( 327,219 ) ( 1,381,191 ) LOSS BEFORE TAXES ( 2,139,362 ) ( 4,875,451 ) Tax benefit 113,415 134,728 NET LOSS ( 2,025,947 ) ( 4,740,723 ) Deemed dividend ( 391,749 ) - NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ ( 2,417,696 ) $ ( 4,740,723 ) BASIC AND DILUTED NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS $ ( 0.80 ) $ ( 192.45 ) BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 3,032,612 24,634 NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ ( 2,417,696 ) $ ( 4,740,723 ) OTHER COMPREHENSIVE INCOME (LOSS) Unrealized foreign currency translation gain (loss) ( 182,467 ) 200,673 TOTAL OTHER COMPREHENSIVE INCOME (LOSS) ( 182,467 ) 200,673 TOTAL COMPREHENSIVE LOSS $ ( 2,600,163 ) $ ( 4,540,050 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 PROPANC BIOPHARMA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED JUNE 30, 2021 and 2020 No. of Shares Value No. of Shares Value No. of Shares Value No. of Shares Value Capital Deficit Income Stock Deficit Common Accumulated Preferred Stock Stock Additional Other Total Series A Series B Common Stock Issuable Paid-in Accumulated Comprehensive Treasury Stockholders' No. of Shares Value No. of Shares Value No. of Shares Value No. of Shares Value Capital Deficit Income Stock 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 cash - - - - 804 1 - - 424,989 - - - 424,990 Issuance of common stock for conversion of convertible debt and accrued interest - - - - 247,619 248 - - 2,124,926 - - - 2,125,174 Reversal of common stock issuable due to cancellation of conversions of convertible debt and accrued interest Reversal of common stock issuable due to cancellation of conversions of convertible debt and accrued interest, shares Issuance of common stock for exercise of warrants Issuance of common stock for exercise of warrants, shares Issuance of common stock for cashless exercise of warrants Issuance of common stock for cashless exercise of warrants Reversal of put premium upon cancellation of conversions of convertible debt Vested restricted stock units Vested restricted stock units, shares Fractional difference due to the reverse stock-split Fractional difference due to the reverse stock-split, shares Deemed dividend upon cashless exercise of warrants Reclassification of put premium upon debt conversion - - - - - - - - 874,924 - - - 874,924 Issuance of common stock for services - - - - 8,729 8 - - 113,634 - - - 113,642 Relative fair value of warrants issued with convertible debt - - - - - - - - 375,905 - - - 375,905 Stock based compensation in connection with stock option grants and restricted stock unit grants - - - - - - - - 300,416 - - - 300,416 Stock based compensation in connection with fair value of warrants issued for services - - - - - - - - 984,810 - - - 984,810 Foreign currency translation gain - - - - - - - - - - 200,673 200,673 Net loss for the fiscal year ended June 30, 2020 - - - - - - - - - ( 4,740,723 ) - ( 4,740,723 ) 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 - - - - 8,786,113 8,787 - - 1,230,288 - - - 1,239,075 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 ) Issuance of common stock for services - - - - 805,646 806 - - 124,766 - - - 125,572 Issuance of common stock for exercise of warrants - - - - 29,820 29 - - 776,015 - - - 776,044 Issuance of common stock for cashless exercise of warrants - - - - 4,199,979 4,200 ( 4,200 ) - - - - Deemed dividend upon alternate cashless exercise of warrants - - - - - - - - 391,749 ( 391,749 ) - - - Reclassification of put premium upon debt conversion - - - - - - - - 590,504 - - - 590,504 Stock based compensation in connection with stock option grants - - - - - - - - 82,872 - - - 82,872 Vested restricted stock units - - - - - - 59 - - - - - - Fractional difference due to the reverse stock-split - - - - 142 - - - - - - - - Foreign currency translation loss - - - - - - - - - - ( 182,467 ) - ( 182,467 ) Net loss for the fiscal year ended June 30, 2021 - - - - - - - - - ( 2,025,947 ) - - ( 2,025,947 ) Balance at June 30, 2021 500,000 $ 5,000 1 $ - 14,055,393 $ 14,056 59 $ - $ 54,074,110 $ ( 58,199,466 ) $ 1,085,204 $ ( 46,477 ) $ ( 3,067,573 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 PROPANC BIOPHARMA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS 2021 2020 Years Ended June 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 2,025,947 ) $ ( 4,740,723 ) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Issuance and amortization of common stock for services 125,572 1,098,452 Foreign currency transaction loss (gain) ( 30,497 ) 143,808 Depreciation expense 1,993 2,473 Amortization of debt discounts 136,527 734,130 Change in fair value of derivative liabilities 8,186 ( 385,293 ) Gain on extinguishment of debt, net ( 50,607 ) ( 67,123 ) Gain from settlement of debt, net ( 49,319 ) - Stock option and restricted stock expense 82,872 300,416 Non-cash interest expense 16,500 15,000 Accretion of put premium 200,410 836,724 Changes in Assets and Liabilities: GST receivable ( 2,147 ) 3,332 Prepaid expenses and other assets - 83,157 Accounts payable 178,311 ( 59,737 ) Deferred rent ( 3,695 ) 3,394 Employee benefit liability 33,134 35,724 Accrued expenses and other payables 152,861 ( 9,740 ) Accrued interest 80,582 156,417 NET CASH USED IN OPERATING ACTIVITIES ( 1,145,264 ) ( 1,849,589 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible promissory notes, net of original issue discounts and issue costs 325,000 1,465,250 Repayments of convertible promissory notes ( 43,000 ) - Proceeds from the sale of common stock - 450,000 Fees associated with offering costs - ( 25,010 ) Proceeds from the exercise of warrants 776,044 - NET CASH PROVIDED BY FINANCING ACTIVITIES 1,058,044 1,890,240 Effect of exchange rate changes on cash 22,468 23,962 NET INCREASE (DECREASE) IN CASH ( 64,752 ) 64,613 CASH AT BEGINNING OF YEAR 67,007 2,394 CASH AT END OF YEAR $ 2,255 $ 67,007 Supplemental Disclosure of Cash Flow Information Cash paid during the year: Interest $ 13,621 $ 6,110 Income Tax $ - $ - Supplemental Disclosure of Non-Cash Investing and Financing Activities Reduction of put premium related to conversions of convertible notes $ 590,504 $ 874,924 Conversion of convertible notes and accrued interest to common stock $ 1,142,205 $ 1,814,336 Discounts related to warrants issued with convertible notes $ - $ 375,905 Discounts related to derivative liability $ - $ 227,000 Operating lease right-of-use asset and operating lease liability recorded on adoption of ASC 842 $ - $ 48,662 Reversal of common stock issuable and put premium due to cancellation of conversions of convertible debt and accrued interest $ 31,801 $ - Deemed dividend upon alternate cashless exercise of warrants $ 391,749 $ - Accounts payable reclass to convertible notes $ 25,000 $ - The accompanying notes are an integral part of these consolidated financial statements. F- 7 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Nature of Operations Propanc Biopharma, Inc. (the “Company,” “we,” “us” or “our”) was originally incorporated in Melbourne, Victoria Australia on October 15, 2007 as Propanc PTY LTD, and continues to be based in Camberwell, Victoria Australia. Since its inception, substantially all of the operations of the Company have been focused on the development of new cancer treatments targeting high-risk patients, particularly cancer survivors, who need a follow-up, non-toxic, long-term therapy designed to prevent the cancer from returning and spreading. The Company anticipates establishing global markets for its technologies. Our lead product candidate, which we refer to as PRP, is an enhanced pro-enzyme formulation designed to enhance the anti-cancer effects of multiple enzymes acting synergistically. It is currently in the preclinical phase of development. On November 23, 2010 , the Company was incorporated in the state of Delaware as Propanc Health Group Corporation. In January 2011, to reorganize the Company, we acquired all of the outstanding shares of Propanc PTY LTD on a one-for-one basis making it a wholly-owned subsidiary of the Company. On July 22, 2016, the Company formed a wholly owned subsidiary, Propanc (UK) Limited under the laws of England and Wales for the purpose of submitting an orphan drug application to the European Medicines Agency as a small and medium-sized enterprise. As of June 30, 2021, there has been no activity within this entity. Effective April 20, 2017, the Company changed its name to “Propanc Biopharma, Inc.” to better reflect the Company’s stage of operations and development. In July 2020, a world first patent was granted in Australia for the cancer treatment method patent family. Presently, there are 29 granted patents and 33 patents under examination in key global jurisdictions relating to the use of proenzymes against solid tumors, covering the lead product candidate PRP. The Company hopes to capture and protect additional patentable subject matter based on the Company’s field of technology relating to pharmaceutical compositions of proenzymes for treating cancer by filing additional patent applications as it advances its lead product candidate, PRP, through various stages of development. On November 17, 2020, the Company effected a one-for-one thousand (1:1,000) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split. Principles of Consolidation The consolidated financial statements include the accounts of Propanc Biopharma, Inc., the parent entity, and its wholly-owned subsidiary, Propanc PTY LTD. All inter-company balances and transactions have been eliminated in consolidation. Propanc (UK) Limited was an inactive wholly-owned subsidiary through June 30, 2021. Use of Estimates The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates in the accompanying consolidated financial statements include the estimates of useful lives for depreciation, valuation of the operating lease liability and related right-of-use asset, valuation of derivatives, valuation of beneficial conversion features on convertible debt, allowance for uncollectable receivables, valuation of equity based instruments issued for other than cash, the valuation allowance on deferred tax assets and foreign currency translation due to certain average exchange rates applied in lieu of spot rates on transaction dates. F- 8 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Foreign Currency Translation and Other Comprehensive Income (Loss) The Company’s wholly owned subsidiary’s functional currency is the Australian dollar (AUD). For financial reporting purposes, the Australian dollar has been translated into the Company’s reporting currency which is the United States dollar ($) and/or (USD). Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity (deficit) as “Accumulated other comprehensive income (loss).” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive income (loss) as a component of other comprehensive income (loss). There have been no significant fluctuations in the exchange rate for the conversion of Australian dollars to USD after the balance sheet date. Other Comprehensive Income (Loss) for all periods presented includes only foreign currency translation gains (losses). Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the consolidated balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the consolidated results of operations as incurred. Effective fiscal year 2021, the parent company determined that these intercompany loans will not be repaid in the foreseeable future and thus, per ASC 830-20-35-3, gains and losses from measuring the intercompany balances are recorded within cumulative translation adjustment, a component of accumulated other comprehensive income (loss). Prior to July 1, 2020, the Company recorded the foreign currency transaction gains and losses from measuring the intercompany balances as a component of other income (expenses) titled foreign currency transaction gain (loss). For the year ended June 30, 2021 and 2020, the Company recognized an exchange gain (loss) of approximately $ 1,005,000 and ($ 133,000 ), on intercompany loans made by the parent to the subsidiary which have not been repaid as of June 30, 2021. As of June 30, 2021 and 2020, the exchange rates used to translate amounts in Australian dollars into USD for the purposes of preparing the consolidated financial statements were as follows: SCHEDULE OF TRANSLATION EXCHANGE RATES June 30, 2021 June 30, 2020 Exchange rate on balance sheet dates USD : AUD exchange rate 0.7500 0.6891 Average exchange rate for the period USD : AUD exchange rate 0.7473 0.6742 Change in Accumulated Other Comprehensive Income (Loss) by component during the years ended June 30, 2021 and 2020 were as follows: SCHEDULE OF CHANGE IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Foreign Currency Items: Beginning balance, June 30, 2019 $ 1,066,998 Foreign currency translation gain 200,673 Balance, June 30, 2020 1,267,671 Foreign currency translation gain 182,467 Ending balance, June 30, 2021 $ 1,085,204 Fair Value of Financial Instruments and Fair Value Measurements The Company measures its financial assets and liabilities in accordance with US GAAP. For certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available for debt with similar terms and maturities are substantially the same. The Company follows accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Also see Note 12 - Derivative Financial Instruments and Fair Value Measurements. F- 9 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Cash and Cash Equivalents Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three months or less with financial institutions, and bank overdrafts. Bank overdrafts, as applicable, are reflected as a current liability on the balance sheets. There were no cash equivalents as of June 30, 2021 or June 30, 2020. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals, and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the declining balance method. The depreciable amount is the cost less its residual value. The estimated useful lives are as follows: SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES Machinery and equipment - 5 years Furniture - 7 years Patents Patents are stated at cost and amortized on a straight-line basis over the estimated future periods if and once the patent has been granted by a regulatory agency. However, the Company will expense any patent costs as long as we are in the startup stage. Accordingly, as the Company’s products are not currently approved for market, all patent costs incurred from 2013 through June 30, 2021 were expensed immediately. This practice of expensing patent costs immediately ends when a product receives market authorization from a government regulatory agency. Impairment of Long-Lived Assets In accordance with ASC 360-10, “Long-lived assets,” which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Employee Benefit/Liability Liabilities arising in respect of wages and salaries, accumulated annual leave, accumulated long service leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured based on the employee’s remuneration rates applicable at the reporting date. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. All employee liabilities are owed within the next twelve months. Australian Goods and Services Tax (“GST”) Revenues, expenses and balance sheet items are recognized net of the amount of GST, except payable and receivable balances which are shown inclusive of GST. The GST incurred is payable on revenues to, and recoverable on purchases from, the Australian Taxation Office. Cash flows are presented in the statements of cash flow on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. As of June 30, 2021 and 2020, the Company was owed $ 4,341 and $ 2,015 , respectively, from the Australian Taxation Office. These amounts were fully collected subsequent to the balance sheet reporting dates. F- 10 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Derivative Instruments ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”), establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings. On the date of conversion or payoff of debt, the Company records the fair value of the conversion shares, removes the fair value of the related derivative liability, removes any discounts and records a net gain or loss on debt extinguishment. On July 1, 2019 the Company adopted ASU 2017-11 under which down-round Features in Financial Instruments will no longer cause derivative treatment. The Company applies the modified prospective method of adoption. There were no cumulative effects on adoption. Convertible Notes With Variable Conversion Options The Company has entered into convertible notes, some of which contain variable conversion options, whereby the outstanding principal and accrued interest may be converted, by the holder, into common shares at a fixed discount to the price of the common stock at or around the time of conversion. The Company treats these convertible notes as stock settled debt under ASC 480, “ Distinguishing Liabilities from Equity ” and measures the fair value of the notes at the time of issuance, which is the result of the share price discount at the time of conversion and records the put premium as interest expense. Income Taxes The Company is governed by Australia and United States income tax laws, which are administered by the Australian Taxation Office and the United States Internal Revenue Service, respectively. The Company follows ASC 740 “ Accounting for Income Taxes ,” when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. The Company follows ASC 740, Sections 25 through 60, “ Accounting for Uncertainty in Income Taxes .” These sections provide detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of ASC 740 and in subsequent periods. Research and Development Costs and Tax Credits In accordance with ASC 730-10, “Research and Development-Overall,” research and development costs are expensed when incurred. Total research and development costs for the fiscal years ended June 30, 2021 and 2020 were $ 230,956 and $ 179,987 , respectively. The Company may apply for research and development tax concessions with the Australian Taxation Office on an annual basis. Although the amount is possible to estimate at year end, the Australian Taxation Office may reject or materially alter the claim amount. Accordingly, the Company does not recognize the benefit of the claim amount until cash receipt since collectability is not certain until such time. The tax concession is a refundable credit. If the Company has net income, then the Company can receive the credit which reduces its income tax liability. If the Company has net losses, then the Company may still receive a cash payment for the credit, however, the Company’s net operating loss carryforwards are reduced by the gross equivalent loss that would produce the credit amount when the income tax rate is applied to that gross amount. The concession is recognized as tax benefit, in operations, upon receipt. During each of the fiscal years ended June 30, 2021 and 2020, the Company applied for, and received from the Australian Taxation Office, a research and development tax credit in the amount of $ 113,415 and $ 134,728 , respectively, which is reflected as a tax benefit in the accompanying consolidated statements of operations and comprehensive income (loss). Stock Based Compensation The Company records stock-based compensation in accordance with ASC 718, “ Stock Compensation ”. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the shorter of the service period or the vesting period. The Company values employee and non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model. F- 11 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 The Company adopted ASU 2018-07 and accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 718 and recognizes the fair value of such awards over the service period. The Company used the modified prospective method of adoption. There was no cumulative effect of adoption on July 1, 2019. Revenue Recognition The Company adopted and implemented on July 1, 2018, ASC 606 – Revenue from Contracts with Customers (“ASC 606”). ASC 606 did not have a material impact on the consolidated financial statements. Upon implementation of ASC 606, the Company recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Subject to these criteria, the Company intends to recognize revenue relating to royalties on product sales in the period in which the sale occurs and the royalty term has begun. Legal Expenses All legal costs for litigation are charged to expense as incurred. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this guidance effective July 1, 2019. On July 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the consolidated statements of operations. Basic and Diluted Net Loss Per Common Share Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for all periods presented are identical. Each holder of the notes has agreed to a 4.99 % beneficial ownership conversion limitation (subject to certain noteholders’ ability to increase such limitation to 9.99% upon 60 days’ notice to the Company) , and each note may not be converted during the first six-month period from the date of issuance. Such securities are considered dilutive securities which were excluded from the computation since the effect is anti-dilutive. F- 12 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 SCHEDULE OF ANTI DILUTIVE SECURITIES June 30, 2021 June 30, 2020 Stock Options 59 60 Stock Warrants 121,329 151,171 Unvested restricted stock 59 59 Convertible Debt 12,416,972 439,113 Total 12,538,419 590,403 Recent Accounting Pronouncements We have reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We have carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term with the exception of those disclosed below. The applicability of any standard is subject to the formal review of the Company’s financial management. In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on July 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company is currently assessing the impact the new guidance will have on our consolidated financial statements. NOTE 2 – GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplate continuation of the Company as a going concern. For the fiscal year ended June 30, 2021, the Company had no revenues, had a net loss of $ 2,025,947 and had net cash used in operations of $ 1,145,264 . Additionally, as of June 30, 2021, the Company had a working capital deficit, stockholders’ deficit and accumulated deficit of $ 3,074,078 , $ 3,067,573 , and $ 58,199,466 , respectively. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of this filing. The consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities, acceptance of the Company’s patent applications, obtaining additional sources of suitable and adequate financing and ultimately achieving a level of sales adequate to support the Company’s cost structure and business plan. The Company’s ability to continue as a going concern is also dependent on its ability to further develop and execute on its business plan. However, there can be no assurances that any or all of these endeavors will be successful. In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, Europe and Australia, including in each of the areas in which the Company operates. The COVID-19 (coronavirus) outbreak has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place” and other governmental regulations, reduced business and consumer spending due to both job losses, reduced investing activity and M&A transactions, among many other effects attributable to the COVID-19 (coronavirus), and there continue to be many unknowns. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like. The Company continues to monitor the impact of the COVID-19 (coronavirus) outbreak closely. The extent to which the COVID-19 (coronavirus) outbreak will impact our operations, ability to obtain financing or future financial results is uncertain. NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following as of June 30, SCHEDULE OF PROPERTY AND EQUIPMENT 2021 2020 Office equipment at cost $ 28,623 $ 26,299 Less: Accumulated depreciation ( 24,368 ) ( 20,552 ) Total property, plant, and equipment $ 4,255 $ 5,747 Depreciation expense for the years ended June 30, 2021 and 2020 were $ 1,993 and $ 2,473 , respectively F- 13 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 NOTE 4 – DUE TO FORMER DIRECTOR - RELATED PARTY Due to former director - related party represents unsecured advances made primarily by a former director for operating expenses on behalf of the Company such as intellectual property and formation expenses. The expenses were paid for on behalf of the Company and are due upon demand. The Company is currently not being charged interest under these advances. The total amount owed the former director at June 30, 2021 and 2020 is $ 33,347 and $ 30,639 , respectively. The Company plans to repay the advances as its cash resources allow (see Note 10). NOTE 5 – LOANS AND NOTES PAYABLE Loan from Former Director - Related Party Loan from the Company’s former director at June 30, 2021 and 2020 were $ 55,500 and $ 50,993 , respectively. The loan bear no interest and is payable on demand. The Company did not repay any amount on this loan during the years ended June 30, 2021 and 2020, respectively, (see Note 10). NOTE 6 – CONVERTIBLE NOTES The Company’s convertible notes outstanding at June 30, 2021 and 2020 were as follows: SCHEDULE OF CONVERTIBLE NOTES June 30, 2021 June 30, 2020 Convertible notes and debenture $ 400,128 $ 1,029,496 Unamortized discounts ( 6,139 ) ( 126,667 ) Accrued interest 34,098 80,101 Premium, net 196,496 574,804 Convertible notes, net $ 624,583 $ 1,557,734 Eagle Equities Financing Agreements December 29, 2017 Securities Purchase Agreement The Company entered into an executory contract on December 29, 2017, whereby the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “December 2017 Eagle Note”) from the Company in the aggregate principal amount of $ 532,435 , with principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities at any time. The December 2017 Eagle Note contained an original issue discount of $ 25,354 such that the purchase price was $ 507,081 . The maturity date of the December 2017 Eagle Note was December 29, 2018 . The Company was in discussions with Eagle Equities to extend the maturity date. The December 2017 Eagle Note bore interest at a rate of 8 % per annum, which interest were to be paid by the Company to Eagle Equities in shares of the Company’s common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time. The Company recorded $ 20,065 of accrued interest for the December 2017 Eagle Note and total principal outstanding as of June 30, 2019 under the December 2017 Eagle Note was $ 171,965 following conversion of $ 360,470 of principal and $ 43,535 of accrued interest during the fiscal year ended June 30, 2019. The Company recorded $ 0 of accrued interest for the December 2017 Eagle Note and total principal outstanding as of June 30, 2020 under the December 2017 Eagle Note was $ 0 following conversion of the remaining principal $ 171,965 and $ 24,751 of accrued interest during the fiscal year to June 30, 2020. Accordingly, there was no outstanding balance as of June 30, 2020. July 13, 2018 Securities Purchase Agreement Effective July 13, 2018, the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “July 2018 Note”) from the Company in the aggregate principal amount of $ 75,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities any time after the six month anniversary of the July 2018 Eagle Note. The transaction closed on July 16, 2018 and on July 19, 2018 the Company received proceeds of $ 71,250 as $ 3,750 was paid directly to legal fees. The maturity date of the July 2018 Eagle Note was July 13, 2019 . The July 2018 Eagle Note bears interest at a rate of 8 % per annum, which interest shall be paid by the Company to Eagle Equities in shares of the Company’s common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time after the six-month anniversary of the Note. The Company recorded $ 5,786 of accrued interest and the total principal outstanding under the July 2018 Eagle Note was $ 75,000 as of June 30, 2019. The Company recorded $ 0 of accrued interest and the total principal outstanding under the July 2018 Eagle Note was $ 0 as of June 30, 2020 following conversion of $ 75,000 of principal and $ 9,300 of accrued interest during the fiscal year ended June 30, 2020. Accordingly, there was no outstanding balance as of June 30, 2020. F- 14 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 August 29, 2018 Securities Purchase Agreement Effective August 29, 2018, the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “August 2018 Eagle Note”) from the Company in the aggregate principal amount of $ 105,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities any time after the six-month anniversary of the August 2018 Eagle Note. The transactions contemplated by the agreement closed on August 30, 2018. The maturity date of the August 29, 2018 Eagle Note was August 29, 2019 . The August 2018 Eagle Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to Eagle Equities in shares of the Company’s common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time after the six-month anniversary of the August 2018 Eagle Note. In April 2020, Eagle Equities agreed to waive the 24 % default interest on this note. The note was fully converted to common stock in fiscal 2021. October 2, 2018 Securities Purchase Agreement Effective October 2, 2018, the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “October 2018 Eagle Note”) from the Company in the aggregate principal amount of $ 210,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities any time after the six-month anniversary of the October 2018 Eagle Note. The transactions contemplated by the purchase agreement closed on October 3, 2018. Pursuant to the terms of the purchase agreement, Eagle Equities deducted $ 10,000 from the principal payment due under the October 2018 Eagle Note, at the time of closing, to be applied to its legal expenses. The maturity date of the October 2018 Eagle Note was October 2, 2019 . The October 2018 Eagle Note shall bore interest at a rate of 8 % per annum, which interest was paid by the Company to Eagle Equities in shares of common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time after the six-month anniversary of the October 2018 Eagle Note. In April 2020, Eagle Equities agreed to waive the 24 % default interest on this note. The note was fully converted to common stock in fiscal 2020. November 30, 2018 Securities Purchase Agreement Effective November 30, 2018, the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “November 2018 Eagle Note”) from the Company in the aggregate principal amount of $ 105,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities any time after the six-month anniversary of the November 2018 Eagle Note. The transactions contemplated by the purchase agreement closed on December 3, 2018. Pursuant to the terms of the purchase agreement, Eagle Equities deducted $ 5,000 from the principal payment due under the November 2018 Eagle Note, at the time of closing, to be applied to its legal expenses. The maturity date of the November 2018 Eagle Note was November 30, 2019 . The November 2018 Eagle Note bore interest at a rate of 8 % per annum, which interest shall be paid by the Company to Eagle Equities in shares of common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time after the six-month anniversary of the November 2018 Eagle Note. In April 2020, Eagle Equities agreed to waive the 24 % default interest on this note. The note was fully converted to common stock in fiscal 2020. December 24, 2018 Securities Purchase Agreement Effective December 24, 2018, the Company entered into a securities purchase agreement with Eagle Equities, pursuant to which Eagle Equities purchased a convertible promissory note (the “December 2018 Eagle Note”) from the Company in the aggregate principal amount of $ 126,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Eagle Equities any time after the six-month anniversary of the December 2018 Eagle Note. The transactions contemplated by the purchase agreement closed on December 24, 2018. Pursuant to the terms of the purchase agreement, Eagle Equities deducted $ 6,000 from the principal payment due under the December 2018 Eagle Note, at the time of closing, to be applied to its legal expenses. The Company used the net proceeds from the December 2018 Eagle Note to repay an outstanding convertible promissory note before such note became convertible. The maturity date of the December 2018 Eagle Note was December 24, 2019 . The December 2018 Eagle Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to Eagle Equities in shares of common stock upon receipt of a notice of conversion by the Company from Eagle Equities at any time after the six-month anniversary of the December 2018 Eagle Note. Upon an event of default, principal and accrued interest would become immediately due and payable under the notes. Additionally, upon an event of default, both notes would accrue interest at a default interest rate of 24 % per annum or the highest rate of interest permitted by law. In April 2020, Eagle Equities agreed to waive the 24 % default interest on this note. Eagle Equities had the option to convert all or any amount of the principal amount of the notes issued to Eagle Equities above, at any time, for shares of the Company’s common stock at a price ranging from 60 % to 61 % of the lowest closing bid price (the “Closing Bid Price”) of the Company’s common stock as reported on the OTC Markets Group, Inc. quotation system for the ten prior trading days, including the day upon which the Company receives a notice of conversion from Eagle Equities (the “Conversion Price”). However, in the event that the Company’s common stock was restricted by the Depository Trust Company for any reason, the Conversion Price was to be lowered to from 50 % to 51 % of the lowest Closing Bid Price for the duration of such restriction. If the Company failed to maintain a reserve of shares of its common stock at least two and a half times the number of shares issuable upon conversion of all the Eagle Notes for at least 60 days after the issuance of the notes issued to Eagle Equities, the conversion discount was to be increased by 10 % . Notwithstanding the foregoing, Eagle Equities was restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Eagle Equities and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock. F- 15 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 The above notes issued to Eagle Equities were treated as stock settled debt under ASC 480 and accordingly, the Company recorded a total of $ 357,688 put premium, of which $ 224,131 and $ 133,557 were released to additional paid in capital following conversion of principal during the fiscal year to June 30, 2020 and 2021, respectively. The total principal amount outstanding under the above Eagle Equities financing agreements, specifically the August 29, 2018 and the December 24, 2018 agreements was $ 205,500 as of June 30, 2020 and accrued interest totaled $ 26,990 . There were $ 0 outstanding principal and accrued interest under the above Eagle Equities financing agreements as of June 30, 2021 as a result of the fiscal 2021 conversions. GS Capital Financing Agreements October 2, 2018 Securities Purchase Agreement Effective October 2, 2018, the Company entered into a securities purchase agreement with GS Capital, pursuant to which GS Capital purchased two 8 % unsecured convertible redeemable notes (the “October 2, 2018 GS Notes”) from the Company in the aggregate principal amount of $ 212,000 , such principal and the interest thereon convertible into shares of the Company’s common stock. The purchase price of $ 106,000 of the first note (the “October 2018 GS Note”) was paid in cash by GS Capital on October 3, 2018. After payment of certain legal fees and expenses, net proceeds to the Company from the October 2018 GS Note totaled $ 100,700 . The purchase price of $ 106,000 of the second note (the “October 2, 2018 GS Back End Note”) was initially paid for by GS Capital issuing to the Company an offsetting $ 106,000 collateralized secured note (the “October 2, 2018 GS Secured Note”). The terms of the October 2018 GS Back End Note require cash funding prior to any conversion thereunder, and such cash funding shall occur on or before June 2, 2019. Both the October 2, 2018 GS Note and the October 2, 2018 GS Back End Note, which was funded on February 27, 2019, matured on October 2, 2019, upon which any outstanding principal and interest thereon is due and payable. The amounts cash funded plus accrued interest under both the October 2018 GS Note and the October 2018 GS Back End Note are convertibles into shares of the Company’s common stock, at any time after April 2, 2019, at a conversion price for each share of common stock equal to 61 % of the lowest closing bid price of the Company’s common stock for the ten prior trading days including the day upon which a notice of conversion is received by the Company from GS Capital, subject to adjustment in certain events. The maturity date of the October 2, 2018 GS Back-Note was October 2019 and the notes were fully converted to common stock in fiscal 2020. January 22, 2020 GS Capital Securities Purchase Agreements Effective January 22, 2020, the Company entered into a securities purchase agreement with GS Capital, pursuant to which GS Capital purchased a convertible promissory note (the “January 22, 2020 GS Note”) from the Company in the aggregate principal amount of $ 58,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of GS Capital any time after the six-month anniversary of the January 22, 2020 GS Capital Note. The January 22, 2020 GS Note contained an original discount of $ 3,500 . The transactions contemplated by the GS Capital Securities Purchase Agreement closed on January 22, 2020. Pursuant to the terms of the GS Capital Securities Purchase Agreement, GS Capital deducted $ 2,500 from the principal payment due under the January 22, 2020 GW Note, at the time of closing, to be applied to its legal expenses and received net cash proceeds of $ 52,000 on January 28, 2020. The Company used the net proceeds from the January 22, 2020 GW Note for general working capital purposes. The maturity date of the January 22, 2020 GS Capital was January 22, 2021 . The January 22, 2020 GS Capital Note bore interest at a rate of 10% per annum, which interest may be paid by the Company to GS Capital in shares of the Company’s common stock; but was not payable until the January 22, 2020 GS Capital Note became payable, whether at the maturity date or upon acceleration or by prepayment. The conversion price for the January 22, 2020 GS Capital Note was equal to a 40 % discount of the lowest closing bid price (“Lowest Trading Price”) of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion, including the day upon which a Notice of Conversion is received. Additionally, GS Capital had the option to convert all or any amount of the principal face amount of the January 22, 2020 GS Capital Note at any time from the date of issuance and ending on the later of the maturity date or the date the Default Amount was paid if an event of default occurs, which is an amount between 112 % and 130 % of an amount equal to the then outstanding principal amount of the January 22, 2020 GS Capital Note plus any interest accrued, for shares of the Company’s common stock at the then-applicable conversion price. The January 22, 2020 GS Note contained certain events of default, upon which principal and accrued interest would become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal would accrue at a default interest rate of 24 % per annum. F- 16 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 The notes issued to GS capital above were treated as stock settled debt under ASC 480 and accordingly the Company recorded a total of $ 106,438 put premium which was expensed in fiscal 2020 of which $ 22,901 and $ 38,667 was released to additional paid in capital following conversion of principal during the year ended June 30, 2020 and 2021, respectively. The Company recorded $ 8,802 of accrued interest and the total principal outstanding under the above GS Capital financing agreements was $ 58,000 as of June 30, 2020 following the conversion of $ 141,820 of principal and $ 76,397 of accrued interest during the year ended June 30, 2020. The total remaining principal outstanding and accrued interest under the above GS Capital financing agreements was $ 0 as of June 30, 2021 following conversion of $ 58,000 of principal and $ 8,508 of accrued interest during the year ended June 30, 2021. Convertible Note Issued with Consulting Agreement August 10, 2017 Consulting Agreement On August 10, 2017, the Company entered into a consulting agreement, retroactive to May 16, 2017, with a certain consultant, pursuant to which the consultant agreed to provide certain consulting and business advisory services in exchange for a $ 310,000 junior subordinated convertible note. The maturity date of the August 10, 2017 Convertible Note was August 2019 and is currently past due (see Note 8). The note accrues interest at a rate of 10 % per annum and is convertible into common stock at the lesser of $ 750 or 65 % of the three lowest trades in the ten trading days prior to the conversion. The note was fully earned upon signing the agreement and matures on August 10, 2019 . The Company accrued $ 155,000 related to this expense at June 30, 2017 and recorded the remaining $ 155,000 related to this expense in fiscal year 2018. Upon an event of default, principal and accrued interest will become immediately due and payable under the note. Additionally, upon an event of default, at the election of the holder, the note would accrue interest at a default interest rate of 18 % per annum or the highest rate of interest permitted by law. The consulting agreement had a three-month term and expired on August 16, 2017. An aggregate total of $ 578,212 of this note was bifurcated with the embedded conversion option recorded as a derivative liability at fair value. During the year ended June 30, 2018, the consultant converted $ 140,000 of principal and $ 10,764 of interest. During the year ended June 30, 2019, the consultant converted an additional $ 161,000 of principal and $ 19,418 of interest leaving a principal balance owed of $ 9,000 at June 30, 2019. During the year ended June 30, 2020, the consultant converted an additional $ 500 of principal and $ 5,248 of interest such that the remaining principal outstanding and accrued interest under this note as of June 30, 2020 was $ 8,500 and $ 22,168 , respectively. On March 15, 2021, the Company entered into a Settlement and Mutual Release Agreement (the “Settlement Agreement”) with the consultant whereby both parties agreed to settle all claims and liabilities under the August 10, 2017 Convertible note for a total of $ 100,000 in the form of a convertible note. All other terms of the August 10, 2017 Convertible Note shall remain in full force and effect. Both parties agree that all future penalties under this note are waived unless the Company fails to authorize to distribute the requested shares upon conversion. The Company has the right to pay off the balance of any remaining amounts dues under this note in cash at any time more than 60 days after March 15, 2021. Prior to the Settlement Agreement, the Company recorded total liabilities $ 56,762 consisting of remaining principal amount of $ 8,500 , accrued interest of $ 23,262 and accrued expenses of $ 25,000 . Accordingly, the Company recognized loss from settlement of debt of $ 43,238 during the year ended June 30, 2021 which is included in gain from settlement of debt, net in the accompanying consolidated statements of operations. The total principal outstanding after adjustment due to the above-mentioned March 15, 2021 settlement agreement and accrued interest under the August 10, 2017 Convertible Note was $ 80,000 and $ 3,738 , respectively, as of June 30, 2021 following conversion of $ 20,000 of principal during the year ended June 30, 2021. Power Up Lending Group Financing Agreements November 26, 2019 Securities Purchase Agreement Effective November 26, 2019, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd. (“Power Up”), pursuant to which Power Up purchased a convertible promissory note (the “November 26, 2019 Power Up Note”) from the Company in the aggregate principal amount of $ 43,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Power Up. The transaction closed on November 22, 2019 and the Company received payment on December 3, 2019 in the amount of $ 40,000 , net of $ 2,500 paid directly toward legal fees and $ 500 to Power Up for due diligence fees. The maturity date of the November 26, 2019 Power Up Note was November 26, 2020 . The November 26, 2019, Power Up Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to Power Up in shares of the Company’s common stock but was not payable until the November 26, 2019 Power Up Note became payable, whether at the maturity date or upon acceleration or by prepayment. The note was fully converted in fiscal 2020. January 7, 2020 Power Up Lending Group Securities Purchase Agreement Effective January 7, 2020, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd. (“Power Up”), pursuant to which Power Up purchased a convertible promissory note (the “January 7, 2020 Power Up Note”) from the Company in the aggregate principal amount of $ 75,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Power Up. The transaction closed on January 7, 2020 and the Company received payment on January 13, 2020 in the amount of $ 72,000 , net of $ 2,500 paid directly toward legal fees and $ 500 to Power Up for due diligence fees. The maturity date of the January 7, 2020 Power Up Note was January 7, 2021 . The January 7, 2020, Power Up Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to Power Up in shares of the Company’s common stock, but not payable until the January 7, 2020 Power Up Note became payable, whether at the maturity date or upon acceleration or by prepayment. F- 17 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 March 12, 2020 Power Up Lending Group Securities Purchase Agreement Effective March 12, 2020, the Company entered into a securities purchase agreement with Power Up Lending Group Ltd. (“Power Up”), pursuant to which Power Up purchased a convertible promissory note (the “March 12, 2020 Power Up Note”) from the Company in the aggregate principal amount of $ 43,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Power Up. The transaction closed on March 12, 2020 and the Company received payment on March 5, 2020 in the amount of $ 40,000 , net of $ 2,500 paid directly toward legal fees and $ 500 to Power Up for due diligence fees. The maturity date of the March 12, 2020 Power Up Note was March 12, 2021 . The March 12, 2020, Power Up Note bore interest at a rate of 8 % per annum, which interest may be paid by the Company to Power Up in shares of the Company’s common stock but was not payable until the March 12, 2020 Power Up Note became payable, whether at the maturity date or upon acceleration or by prepayment. All the notes issued above to Power Up contained certain events of default, upon which principal and accrued interest would become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal would accrue at a default interest rate of 22 % per annum. Additionally, Power Up had the option to convert all or any amount of the principal face amount of the notes issued to Power Up, starting on certain dates as defined in the note agreements and ending on the later of the maturity date or the date the Default Amount is paid if an event of default occurs, which was an amount equal to 150 % of an amount equal to the then outstanding principal amount of the notes plus any interest accrued, for shares of the Company’s common stock at the then-applicable conversion price. The conversion price for the above Power Up notes was $3,050, subject to certain Market Price (as defined below) adjustment. If the Market Price was greater than or equal to $5,000, the conversion price was to be the greater of 65 % of the Market Price (“Variable Conversion Price”) and $3,050. In the event Market Price was less than $5,000, the conversion price was to be the Variable Conversion Price. As defined in the note agreements, the “Market Price” was the average of the lowest three closing bid prices during the ten day trading period prior to and including the day the Company receives a notice of conversion from Power Up on the electronic quotation system or applicable principal securities exchange or trading market or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” during the ten prior trading days, including the day upon which the Company receives a notice of conversion from Power Up. Notwithstanding the foregoing, Power Up was restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Power Up and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock. An aggregate initial total of $ 422,557 of these notes were bifurcated with the embedded conversion option recorded as derivative liabilities at fair value. The total principal amount outstanding under the above Power Up financing agreements, specifically the January 7, 2020 and March 12, 2020 Power Up Notes, was $ 118,000 and accrued interest of $ 3,903 as of June 30, 2020. The total principal amount outstanding under the above Power Up financing agreement, specifically the January 7, 2020 and March 12, 2020 Power Up Notes, was $ 0 and accrued interest of $ 0 as of June 30, 2021 following repayment in cash of $ 43,000 of the principal balance and $ 1,816 of accrued interest and conversions into common stock during the year ended June 30, 2021. Accordingly, there was no outstanding principal balance as of June 30, 2021. Redstart Holdings Corp Financing Agreement May 23, 2019 Securities Purchase Agreement Effective May 23, 2019, the Company issued a convertible promissory note (the “May 23 Redstart Holdings Note”) to Redstart Holdings Corp (“Redstart Holdings”) in the aggregate principal amount of $ 133,000 , with principal and the interest thereon convertible into shares of the Company’s common stock at the option of Redstart Holdings any time after 180 days of issuance. At the time of closing on May 31, 2019, Redstart Holdings deducted $ 3,000 from the principal payment due under the May 2019 Redstart Holdings Note to be applied to its legal expenses, such that the Company received aggregate net proceeds of $ 130,000 at closing. The maturity date of the May 2019 Redstart Holdings Note was May 23, 2020 and bore interest at a rate of 8 % per annum. The total principal amount outstanding and accrued interest under the above Redstart Holdings financing agreement, specifically the May 23, 2019 agreement at June 30, 2019 was $ 133,000 and $ 1,137 respectively and as of June 30, 2020 total principal amount outstanding and accrued interest totaled $ 0 and $ 0 respectively following conversion of $ 133,000 of the principal balance and $ 5,320 of accrued interest during the year ended June 30, 2020. F- 18 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Odyssey Capital Financing Agreements July 30, 2019 Securities Purchase Agreement Effective July 30, 2019, the Company entered into a securities purchase agreement with Odyssey Capital Funding LLC, (“Odyssey”), pursuant to which Odyssey purchased a convertible promissory note (the “July 30, 2019 Odyssey Note”) from the Company in the aggregate principal amount of $ 320,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Odyssey. The July 30, 2019 Odyssey Note contains an original discount of $ 25,000 . The transaction closed on July 30, 2019 and the Company received payment on August 1, 2019 in the amount of $ 295,000 , of which $ 10,000 was paid directly toward legal fees, resulting in net cash proceeds of $ 285,000 . The maturity date of the July 30, 2019 Odyssey Note was July 30, 2020 . The July 2019 Odyssey Note bore interest at a rate of 10 % per annum, which interest may be paid by the Company to Odyssey in shares of the Company’s common stock but was not payable until the July 30, 2019 Odyssey Note became payable, whether at the maturity date or upon acceleration or by prepayment. The July 30, 2019 Odyssey Note contained certain events of default, upon which principal and accrued interest would become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal would accrue at a default interest rate of 24 % per annum. The note was treated as stock settled debt under ASC 480 and accordingly the Company recorded a $ 172,308 put premium. Additionally, Odyssey had the option to convert all or any amount of the principal face amount of the July 30, 2019 Odyssey Note, starting on January 31, 2020 and ending on the later of the maturity date or the date the Default Amount was paid if an event of default occurred, which was an amount equal to 120 % of an amount equal to the then outstanding principal amount of the July 30, 2019 Odyssey Note plus any interest accrued from July 30, 2019 at the default interest rate of 24 % per annum for shares of the Company’s common stock at the then-applicable conversion price. The conversion price for the July 30, 2019 Odyssey Note was equal to 65 % of the lowest closing bid price of the Common Stock as reported on the OTC Markets on which the Company’s shares were then traded or any exchange upon which the Common Stock may be traded in the future, for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company. The total principal amount outstanding under the above Odyssey financing agreement, specifically the July 30, 2019 Odyssey Note, was $ 0 and accrued interest of $ 0 as of June 30, 2020 following conversion of $ 320,000 of the principal balance and $ 23,220 of accrued interest during the year ended June 30, 2020 resulting in full repayment of the note and a full reduction of the put premium. The note was fully converted in fiscal 2020. Auctus Fund Financing Agreements August 30, 2019 Securities Purchase Agreement Effective August 30, 2019, the Company entered into a securities purchase agreement with Auctus Fund, LLC (“Auctus”), pursuant to which Auctus purchased a convertible promissory note (the “August 30, 2019 Auctus Note”) from the Company in the aggregate principal amount of $ 550,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Auctus. The transaction closed on August 30, 2019 and the Company received payment on September 4, 2019 in the amount of $ 550,000 , of which $ 5,000 was paid directly toward legal fees and $ 40,000 to Auctus for due diligence fees resulting in net cash proceeds of $ 505,000 . The maturity date of the August 30, 2019 Auctus Note was August 30, 2020 and is currently past due. The August 30, 2019 Auctus Note bears interest at a rate of 10 % per annum, but not payable until the August 30, 2019 Auctus Note became payable, whether at the maturity date or upon acceleration or by prepayment. The note is treated as stock settled debt under ASC 480 and accordingly the Company recorded a $ 366,667 put premium. The August 30, 2019 Auctus Note may not be prepaid without the written consent of Auctus. Any amount of principal or interest which is not paid when due shall bear interest at the rate of 24 % per annum. Additionally, Auctus has the option to convert all or any amount of the principal face amount and accrued interest of the August 30, 2019 Auctus Note, at any time following the issue date and ending on the later of the maturity date or the date of payment of the Default Amount if an event of default occurs, which is an amount equal to 125 % of an amount equal to the then outstanding principal amount of the August 30, 2019 Auctus Note (but not less than $15,000) plus any interest accrued from August 30, 2019 at the default interest rate of 24 % per annum, for shares of the Company’s common stock at the then-applicable conversion price. Upon the holder’s election to convert accrued interest, default interest or any penalty amounts as stipulated, the Company may elect to pay those amounts in cash. The note may also be prepaid by the Company at any time between the date of issuance and August 13, 2020 at 135% multiplied by the sum of (a) the then outstanding principal amount plus (b) accrued and unpaid interest plus (c) default interests , if any. The conversion price for the August 30, 2019 Auctus Note shall be the Variable Conversion Price, being 60 % of the Market Price on the date of conversion. Notwithstanding the foregoing, Auctus shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Auctus and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock. F- 19 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 In connection with the issuance of the August 2019 Auctus Note, the Company issued common stock purchase warrants to Auctus to purchase 450 shares of the Company’s common stock (the “First Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such First Warrant at an “Exercise Price” of $ 2,250 . In connection with the issuance of the Note, the Company shall issue a common stock purchase warrant to Buyer to purchase 300 shares of the Company’s common stock (the “Second Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such Second Warrant at an “Exercise Price” of $ 3,330 . In connection with the issuance of the Note, the Company shall issue a common stock purchase warrant to Buyer to purchase 225 shares of the Company’s common stock (the “Third Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such Third Warrant at an “Exercise Price” of $ 4,500 . The First Warrant, Second Warrant, and Third Warrant shall collectively be referred as the “Warrants”. The Warrants have an “Exercise Period” of five years from the date of issuance being August 30, 2019. Under the terms of the Purchase Agreement and the Warrants, the Selling Security Holder may not either convert the Notes nor exercise the Warrants to the extent (but only to the extent) that the Selling Security Holder or any of its affiliates would beneficially own a number of shares of our Common Stock which would exceed 4.99 % of our outstanding shares. The Company accounted for the warrants by using the relative fair value method and recorded debt discount from the relative fair value of the warrants of $ 375,905 using a simple binomial lattice model. In connection with the Purchase Agreement, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to register the shares of Common Stock underlying the Securities in a Registration Statement with the SEC as well as the Commitment Shares (as defined herein). The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. The Note is subject to customary default provisions and also includes a cross-default provision which provides that a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements (as defined therein), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements. Upon occurrence of any such event, the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreements or the Note. The August 30, 2019 Auctus Note contain certain events of default, upon which principal and accrued interest will become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal shall accrue at a default interest rate of 24% per annum. The total principal amount outstanding under the above Auctus financing agreement, specifically the August 30, 2019 Auctus Note, was $358,965 and accrued interest of $ 486 as of June 30, 2020 following conversion of $ 191,035 of the principal balance and $ 43,176 of accrued interest during the year ended June 30, 2020. Accordingly, $ 127,356 of the put premium was released in respect of the August 30, 2019 Auctus Note during the year ended June 30, 2020 following conversion of the principal balance. The total principal amount outstanding under the above Auctus financing agreement, specifically the August 30, 2019 Auctus Note, was $ 32,848 and accrued interest of $ 0 as of June 30, 2021 following conversion of $ 326,117 of the principal balance and $ 39,536 of accrued interest during the year ended June 30, 2021. Accordingly, $ 217,411 of the put premium was released in respect of the August 30, 2019 Auctus Note during the year ended June 30, 2021 following conversion of the principal balance. GW Holdings Securities Purchase Agreements October 1, 2019 Securities Purchase Agreement Effective October 1, 2019, the Company entered into a securities purchase agreement with GW Holdings, pursuant to which GW Holdings purchased a convertible promissory note (the “October 1, 2019 GW Note”) from the Company in the aggregate principal amount of $ 131,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of GW Holdings any time after the six-month anniversary of the October 1, 2019 GW Holdings Note. The transactions contemplated by the GW Holdings Securities Purchase Agreement closed on October 1, 2019. Pursuant to the terms of the GW Holdings Securities Purchase Agreement, the lender deducted $ 6,000 from the principal payment due under the October 1, 2019 GW Note, at the time of closing, to be applied to its legal expenses. The Company used the net proceeds of $ 125,000 from the October 1, 2019 GW Note for general working capital purposes. The maturity date of the October 1, 2019 GW Holdings was October 1, 2020 and is currently past due. The October 1, 2019 GW Holdings Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to GW Holdings in shares of the Company’s common stock; but was not payable until the October 1, 2019 GW Holdings Note became payable, whether at the maturity date or upon acceleration or by prepayment. December 10, 2020 Securities Purchase Agreement Effective December 10, 2020, the Company entered into a securities purchase agreement with GW Holdings, pursuant to which GW Holdings purchased a convertible promissory note (the “December 10, 2020 GW Note”) from the Company in the aggregate principal amount of $ 131,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of GW Holdings anytime from the issuance of the December 10, 2020 GW Holdings Note. The transactions contemplated by the GW Holdings Securities Purchase Agreement closed on December 10, 2020. Pursuant to the terms of the GW Holdings Securities Purchase Agreement, the lender deducted $ 6,000 from the principal payment due under the December 10, 2020 GW Note, at the time of closing, to be applied to its legal expenses. The Company intends to use the net proceeds of $ 125,000 from the December 10, 2020 GW Note for general working capital purposes. The maturity date of the December 10, 2020 GW Holdings is December 10, 2021 . The December 10, 2020 GW Holdings Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to GW Holdings in shares of the Company’s common stock; but shall not be payable until the December 10, 2020 GW Holdings Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. F- 20 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 The above notes issued to GW Holdings contain certain events of default, upon which principal and accrued interest will become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal shall accrue at a default interest rate of 24 % per annum, or if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. Additionally, GW Holdings has the option to convert all or any amount of the principal face amount of the notes issued to GW Holdings at any time from the date of issuance and ending on the later of the maturity date or the date the Default Amount is paid if an event of default occurs, which is an amount between 110 % and 150 % of an amount equal to the then outstanding principal amount of such notes plus any interest accrued, for shares of the Company’s common stock at the then-applicable conversion price. The conversion price for the above GW Holdings notes shall be equal to a 40% discount of the lowest closing bid price (“Lowest Trading Price”) of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion, including the day upon which a Notice of Conversion is received. Notwithstanding the foregoing, GW Holdings shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by GW Holdings and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock which may be increased up to 9.99% upon 60 days prior written notice by the GW Holdings to the Company . These notes are treated as stock settled debt under ASC 480 and accordingly the Company recorded a total of $ 174,666 put premium. The total principal amount outstanding under the above October 1, 2019 GW Holdings financing agreement was $ 30,000 and accrued interest of $ 1,776 as of June 30, 2020 following conversion of $ 101,000 of the principal balance and $ 5,082 of accrued interest during the year ended June 30, 2020. The total principal amount and accrued interest outstanding under the above October 1, 2019 GW Holdings financing agreement was $ 0 as of June 30, 2021 following conversion of $ 30,000 of the principal balance and $ 3,877 of accrued interest during the year ended June 30, 2021. Accordingly, $ 67,333 and $ 20,000 of the put premium was reclassed to additional paid in capital during the year ended June 30, 2020 and 2021, respectively, following conversion of the principal balance. This note was fully converted into common stock in fiscal 2021. The total principal amount outstanding under the above December 10, 2020 GW Holdings financing agreement, was $ 90,000 and accrued interest of $ 4,636 as of June 30, 2021 following conversion of $ 41,000 of the principal balance and $ 1,084 of accrued interest during the year ended June 30, 2021. Accordingly, $ 27,333 of the put premium was reclassed to additional paid in capital in respect of the October 1, 2019 GW Holdings Note during the year ended June 30, 2021 following conversion of the principal balance. Crown Bridge Securities Purchase Agreements Effective October 3, 2019, the Company entered into a securities purchase agreement with Crown Bridge Partners, pursuant to which Crown Bridge purchased a convertible promissory note (the “October 3, 2019 Crown Bridge Note”) from the Company in the aggregate principal amount of $ 108,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Crown Bridge any time from the of issuance of the of the October 3, 2019 Crown Bridge Note. The transactions contemplated by the Crown Bridge Securities Purchase Agreement closed on October 3, 2019. Pursuant to the terms of the Crown Bridge Securities Purchase Agreement, Crown Bridge deducted $ 3,000 from the principal payment due under the October 3, 2019 Crown Bridge Note, at the time of closing, to be applied to its legal expenses, and there was a $ 5,000 original issuance discount resulting in $ 100,000 net proceeds to the Company. The Company intends to use the net proceeds from the October 3, 2019 Crown Bridge Note for general working capital purposes. The maturity date of the October 3, 2019 Crown Bridge was October 3, 2020 and is currently past due. The October 3, 2019 Crown Bridge Note bears interest at a rate of 10 % per annum, which interest may be paid by the Company to Crown Bridge in shares of the Company’s common stock; but shall not be payable until the October 2019 Crown Bridge Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. Additionally, Crown Bridge has the option to convert all or any amount of the principal face amount of the October 3, 2019 Crown Bridge Note at any time from the date of issuance and ending on the later of the maturity date or the date the Default Amount is paid if an event of default occurs, which is an amount between 110 % and 150 % of an amount equal to the then outstanding principal amount of the October 3, 2019 Crown Bridge Note plus any interest accrued, for shares of the Company’s common stock at the then-applicable conversion price. The conversion price for the October 3, 2019 Crown Bridge Note shall be equal to a 40% discount of the lowest closing bid price (“Lowest Trading Price”) of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion, including the day upon which a Notice of Conversion is received. Notwithstanding the foregoing, Crown Bridge shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Crown Bridge and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock which may be increased up to 9.99 % upon 60 days prior written notice by the Crown Bridge to the Company. The note is treated as stock settled debt under ASC 480 and accordingly the Company recorded a $ 72,000 put premium. F- 21 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 The October 3, 2019 Crown Bridge Note contain certain events of default, upon which principal and accrued interest will become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal shall accrue at a default interest rate of 15 % per annum, or if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. The total principal amount outstanding under the above Crown Bridge financing agreement was $ 65,280 and accrued interest of $ 7,232 as of as of June 30, 2020 following conversion of $ 42,720 of the principal balance during the year ended June 30, 2020. Accordingly, $ 28,480 of the put premium was released in respect of the October 3, 2019 Crown Bridge Note during the year ended June 30, 2020 following conversion of the principal balance. The total principal amount outstanding under the above Crown Bridge financing agreement was $ 65,280 and accrued interest of $ 16,138 as of as of June 30, 2021. There were 15,000 unissued shares which were considered issuable for accounting purposes during the 1 st quarter of fiscal 2021 related to a conversion notice dated and received on September 16, 2020. In November 2020, the Company was notified by the note holder of the cancellation of this conversion notice as a result of the reverse stock split and as such the Company reversed the effects of this transaction thereby increasing the principal balance by $ 9,600 and put premium by $ 6,400 and a corresponding decrease in equity of $ 16,000 . Ader Alef Securities Purchase Agreements Effective January 13, 2020, the Company entered into a securities purchase agreement with Ader Alef, pursuant to which Ader Alef purchased a convertible promissory note (the “January 13, 2020 Ader Alef Note”) from the Company in the aggregate principal amount of $ 110,250 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Ader Alef any time after the six-month anniversary of the January 13, 2020 Ader Alef Note. The January 13, 2020 Ader Alef Note contained an original discount of $ 5,250 . The transactions contemplated by the Ader Alef Securities Purchase Agreement closed on January 13, 2020. Pursuant to the terms of the Ader Alef Securities Purchase Agreement, Ader Alef deducted $ 5,000 from the principal payment due under the January 13, 2020 Ader Alef Note at the time of closing, to be applied to its legal expenses and the Company received net cash proceeds of $ 100,000 on January 15, 2020. The Company used the net proceeds from the January 13, 2020 Ader Alef Note for general working capital purposes. The maturity date of the January 13, 2020 Ader Alef was January 13, 2021. The January 13, 2020 Ader Alef Note bore interest at a rate of 8 % per annum, which interest may be paid by the Company to Ader Alef in shares of the Company’s common stock; but was not payable until the January 13, 2020 Ader Alef Note became payable, whether at the maturity date or upon acceleration or by prepayment. Additionally, Ader Alef had the option to convert all or any amount of the principal face amount of the January 13, 2020 Ader Alef Note at any time from the date of issuance and ending on the later of the maturity date or the date the Default Amount was paid if an event of default occurs, which was an amount between 120 % and 150 % of an amount equal to the then outstanding principal amount of the January 13, 2020 Ader Alef Note plus any interest accrued, for shares of the Company’s common stock at the then-applicable conversion price. The conversion price for the January 13, 2020 Ader Alef Note during the first 6 months the January 13, 2020 Ader Alef Note was fixed at $2.50 and thereafter would be equal to a 35 % discount of the lowest closing bid price (“Lowest Trading Price”) of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion, including the day upon which a Notice of Conversion was received. Notwithstanding the foregoing, Ader Alef was restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Ader Alef and its affiliates, exceeds 4.99 % of the outstanding shares of the Company’s common stock which may be increased up to 9.99 % upon 60 days prior written notice by the Ader Alef to the Company. The note was treated as stock settled debt under ASC 480 and accordingly the Company recorded a $ 59,365 put premium. The January 13, 2020 Ader Alef Note contained certain events of default, upon which principal and accrued interest would become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal would accrue at a default interest rate of 24% per annum, or if such rate was usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. The total principal amount outstanding under the above Ader Alef financing agreement was $ 110,250 and accrued interest of $ 4,073 as of June 30, 2020. The total principal amount outstanding and accrued interest under the above Ader Alef financing agreement was $ 0 as of as of June 30, 2021 following conversion of $ 110,250 of the principal balance and $ 7,493 accrued interest during the year ended June 30, 2021. Accordingly, $ 59,365 of the put premium was released in respect of the Ader Alef Note during the year ended June 30, 2021 following conversion of the principal balance. This note was fully converted into common stock in fiscal 2021. F- 22 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 LG Capital Securities Purchase Agreements Effective February 19, 2020, the Company entered into a securities purchase agreement with LG Capital Funding, LLC (“LG Capital”), pursuant to which LG Capital purchased a convertible promissory note (the “February 19, 2020 LG Capital Note”) from the Company in the aggregate principal amount of $ 75,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of LG Capital any time after the six month anniversary of the February 19, 2020 LG Capital Note. The February 19, 2020 LG Capital Note contained an original discount of $ 3,750 . The transactions contemplated by the LG Capital Securities Purchase Agreement closed on March 4, 2020. Pursuant to the terms of the LG Capital Securities Purchase Agreement, LG Capital deducted $ 2,500 from the principal payment due under the February 19, 2020 LG Capital Note at the time of closing, to be applied to its legal expenses and the Company received net cash proceeds of $ 71,250 on March 25, 2020. The Company used the net proceeds from the February 19, 2020 LG Capital Note for general working capital purposes. The maturity date of the February 19, 2020 LG Capital Note was February 19, 2021 . The February 19, 2020 LG Capital Note bore interest at a rate of 8 % per annum, which interest was paid by the Company to LG Capital in shares of the Company’s common stock; but was not payable until the February 19, 2020 LG Capital Note became payable, whether at the maturity date or upon acceleration or by prepayment. During the first 60 to 180 days following the date of the note, the Company had the right to prepay the principal and accrued but unpaid interest due under the February 19, 2020 LG Capital Note, together with any other amounts that the Company may owe the holder under the terms of the note, at a premium ranging from 112 % to 135 % as defined in the note agreement. After this initial 180-day period, the Company did not have a right to prepay the February 19, 2020 LG Capital Note. The conversion price for the February 19, 2020 LG Capital Note during the first 6 months the February 19, 2020 LG Capital Note was fixed at $500 and thereafter was equal to a 35% discount of the lowest closing bid price (“Lowest Trading Price”) of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion, including the day upon which a Notice of Conversion was received. Notwithstanding the foregoing, LG Capital was restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by LG Capital and its affiliates, exceeds 9.99 % of the outstanding shares of the Company’s common stock. The note was treated as stock settled debt under ASC 480 and accordingly the Company recorded a $ 40,385 put premium. The February 19, 2020 LG Capital Note contained certain events of default, upon which principal and accrued interest would become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal would accrue at a default interest rate of 24 % per annum, or if such rate was usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. The total principal amount outstanding under the above LG Capital financing agreement was $ 75,000 and accrued interest of $ 2,164 as of June 30, 2020. The total principal amount outstanding and accrued interest under the above LG Capital financing agreement was $ 0 as of June 30 2021 following conversion of $ 75,000 of the principal balance and $ 5,421 accrued interest during the year ended June 30, 2021. Accordingly, $ 40,385 of the put premium was released in respect of the February 19, 2020 LG Capital Note during the year ended June 30, 2021 following conversion of the principal balance. This note was fully converted into common stock in fiscal 2021. There were 9,427 unissued shares which were considered issuable for accounting purposes during the first quarter of fiscal 2021 related to a conversion notice dated and received on September 9, 2020. In November 2020, the Company was notified by the note holder of the cancellation of this conversion notice as a result of the reverse stock split and as such the Company reversed the effects of this transaction thereby increasing the principal balance by $ 10,000 , accrued interest of $ 416 and put premium by $ 5,385 and a corresponding decrease in equity of $ 15,801 . Geneva Roth Remark Securities Purchase Agreements December 2, 2020 Securities Purchase Agreement Effective December 2, 2020, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc.(“Geneva Roth”), pursuant to which Geneva Roth purchased a convertible promissory note (the “December 2, 2020 Geneva Roth”) from the Company in the aggregate principal amount of $ 78,000 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Geneva Roth any time after the six month anniversary of the December 2, 2020 Geneva Roth. The December 2, 2020 Geneva Roth contains an original discount of $ 3,000 . The Company intends to use the net proceeds from the December 2, 2020 Geneva Roth for general working capital purposes. The maturity date of the December 2, 2020 Geneva Roth Note is December 2, 2021. The December 2, 2020 Geneva Roth Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to Geneva Roth in shares of the Company’s common stock; but shall not be payable until the December 2, 2020 Geneva Roth Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. F- 23 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 January 5, 2021 Securities Purchase Agreement Effective January 5, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc., pursuant to which Geneva Roth purchased a convertible promissory note (the “January 5, 2021 Geneva Roth”) from the Company in the aggregate principal amount of $ 68,500 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Geneva Roth any time after the six-month anniversary of the January 5, 2021 Geneva Roth. The January 5, 2021 Geneva Roth contains an original issue discount of $ 3,500 . The Company intends to use the net proceeds from the January 5, 2021 Geneva Roth for general working capital purposes. The maturity date of the January 5, 2021 Geneva Roth Note is January 5, 2022. The January 5, 2021 Geneva Roth Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to Geneva Roth in shares of the Company’s common stock; but shall not be payable until the January 5, 2021 Geneva Roth Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. March 16, 2021 Securities Purchase Agreement Effective March 16, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc., pursuant to which Geneva Roth purchased a convertible promissory note (the “March 16, 2021 Geneva Roth”) from the Company in the aggregate principal amount of $ 63,500 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Geneva Roth any time after the six-month anniversary of the March 16, 2021 Geneva Roth. The March 16, 2021 Geneva Roth contains an original discount of $ 3,500 . The Company intends to use the net proceeds from the March 16, 2021 Geneva Roth for general working capital purposes. The maturity date of the March 16, 2021 Geneva Roth Note is March 16, 2022. The March 16, 2021 Geneva Roth Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to Geneva Roth in shares of the Company’s common stock; but shall not be payable until the March 16, 2021 Geneva Roth Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. During the first 60 to 180 days following the date of these notes, the Company has the right to prepay the principal and accrued but unpaid interest due under the above notes issued to Geneva Roth, together with any other amounts that the Company may owe the holder under the terms of the note, at a premium ranging from 110 % to 129 % as defined in the note agreement. After this initial 180-day period, the Company does not have a right to prepay such notes. The conversion price for the above Geneva Roth notes shall be equal to a 35 % discount of the market price based on the average of the lowest three trading prices of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion. Notwithstanding the foregoing, Geneva Roth shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Geneva Roth and its affiliates, exceeds 9.99 % of the outstanding shares of the Company’s common stock. These notes are treated as stock settled debt under ASC 480 and accordingly the Company recorded a total of $ 113,077 put premium for the three notes. The above Geneva Roth notes contain certain events of default, upon which principal and accrued interest will become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal shall accrue at a default interest rate of 22 % per annum, or if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. The total principal amounts outstanding under the above Geneva Roth financing agreements were $ 132,000 and accrued interest of $ 3,477 as of June 30, 2021 following conversion of $ 78,000 of the principal balance and $ 3,120 accrued interest during the year ended June 30, 2021. Accordingly, $ 42,000 of the put premium was released in respect of the Geneva Roth financing agreements during the year ended June 30, 2021 following conversion of the principal balance. Amortization of debt discounts The Company recorded $ 211,000 and $ 728,904 of debt discounts related to the above note issuances during the years ended June 30, 2021 and 2020, respectively. The Company recorded $ 498,160 and $ 836,724 of put premiums related to the above note issuances during the years ended June 30, 2021 and 2020, respectively. The debt discounts are being amortized over the term of the debt and the put premiums are expensed on issuance of the debt with the liability released to additional paid in capital on conversion of the principal. Amortization of all debt discounts for the years ended June 30, 2021 and 2020 was $ 136,527 and $ 734,130 , respectively. The Company reclassified $ 590,504 and $ 874,924 in put premiums to additional paid in capital following conversions during the year ended June 30, 2021 and 2020, respectively. F- 24 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 NOTE 7 – INCOME TAXES The Company follows ASC 740-10-10, under which an entity recognizes deferred tax assets and liabilities for future tax consequences or for events that were previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on enacted tax law provisions. The effects of future changes in tax laws or rates are not anticipated. Through June 30, 2010, the Company operated exclusively in Australia. The Company was wholly subject to Australian income tax laws and regulations, which are administered by the Australian Taxation Office for the years ended June 30, 2010 and all prior years. On November 23, 2010, the Company was incorporated in the state of Delaware. In January 2011, the Company acquired all of the outstanding shares of Propanc PTY LTD on a one-for-one basis with Propanc PTY LTD becoming a wholly owned subsidiary of the Company. As a result of these transactions, the Company is subject to the income tax laws of both the United States and Australia for the years ended June 30, 2013 through June 30, 2021. The reconciliation of income tax expense computed at the U.S. federal statutory rate of 21 % to the income tax provision for the years ended June 30, 2021 and 2020 is as follows: SCHEDULE OF INCOME TAX PROVISION US June 30, 2021 June 30, 2020 Year Ended US June 30, 2021 June 30, 2020 Loss before Income taxes $ ( 2,025,947 ) $ ( 4,740,723 ) Taxes under statutory US tax rates $ ( 425,449 ) $ ( 995,552 ) Increase (decrease) in valuation allowance 1,146,001 1,137,716 Prior period adjustment ( 1,063,710 ) ( 14,624 Foreign tax rate differential ( 51,169 ) ( 128,492 ) Income tax rate change 392,767 - Other 1,559 952 Income tax (expense) benefit $ - $ - The Company reflects a tax benefit on its consolidated statement of operations and comprehensive income (loss) in 2021 and 2020 of $ 113,415 and $ 134,728 , respectively. These amounts are research and development tax credits and are not considered income tax. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company is currently evaluating the impact of the CARES Act, but due to sustained losses, the NOL carryback provision of the CARES Act would not yield a benefit to us. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES June 30, 2021 June 30, 2020 Year Ended June 30, 2021 June 30, 2020 Deferred tax assets Warrant Derivative Liability $ 7,403 $ 7,403 Accrued Expenses 342,464 297,086 Prepaid Investor Services 444,411 470,050 Non-cash interest 687,529 596,004 Intangibles (Intellectual Property and Patent Cost) 259,743 240,428 Deferred Rent 4,262 1,969 Formation Expense 6,815 7,208 Net Operating Loss CF 8,546,920 7,438,911 Foreign Exchange Loss (OCI) ( 39,379 ) ( 39,379 ) Revalue of derivative liability 439,958 438,239 Stock Based Compensation 51,481 51,481 Total Deferred tax assets $ 10,751,607 $ 9,509,400 Deferred tax liabilities R&D $ ( 197,604 ) $ ( 177,702 ) Gain on extinguishment of debt ( 277,614 ) 266,987 Capital Raising Costs ( 321,291 ) ( 255,614 ) Total deferred tax liabilities $ ( 796,509 ) $ ( 700,303 ) Net deferred tax assets (liabilities) $ 9,955,098 $ 8,809,097 Valuation allowance ( 9,955,098 ) ( 8,809,097 ) Net deferred tax assets (liabilities) $ - $ - F- 25 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 At June 30, 2021, the Company had U.S. net operating loss carry forwards of approximately $ 9,588,164 that may be offset against future taxable income, subject to limitation under IRC Section 382. Of the approximately $ 9.6 million of net operating loss carryforwards, $ 7.2 million will begin to expire in 2024 and the remaining $ 2.4 million will not expire. The Australian tax rate changed from 27.5 % in 2020 to 26 % in 2021. At June 30, 2021, the Company had Australia net operating loss carry forwards of approximately $ 25,128,485 million which can be carried forward without expiration. No tax benefit has been reported in the June 30, 2021 and 2020 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence. The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of June 30, 2021 and 2020, respectively. Management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits. The Company follows ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of June 30, 2021 and 2020, respectively. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of June 30, 2021, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended June 30, 2021 and 2020. The Company did not recognize any interest or penalties during fiscal 2021 or 2020 related to unrecognized tax benefits. The income tax returns filed for the tax years from inception will be subject to examination by the relevant taxing authorities. NOTE 8 – STOCKHOLDERS’ DEFICIT Increase in Authorized Shares of Common Stock and Reverse Stock Split On February 4, 2020 the Directors resolved to increase the Common Stock of the Company from 100,000,000 authorized shares to 1,000,000,000 authorized shares and believes that such number of authorized shares of Common Stock will be in the best interests of the Corporation and its stockholders because the Board believes that the availability of more shares of Common Stock for issuance will allow the Corporation greater flexibility in pursuing financing from investors, meeting business needs as they arise, taking advantage of favorable opportunities and responding to a changing corporate environment. The Company filed the necessary documents with the U.S. Securities and Exchange Commission on February 6, 2020 and with the amendment to the authorized shares being approved by the State of Delaware on March 13, 2020. On November 17, 2020, the Company effected a one-for-one thousand (1:1,000) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split. Preferred Stock The total number of shares of preferred stock that the Company is authorized to issue is 1,500,005 , $ 0.01 par value per share. These preferred shares have no rights to dividends, profit sharing or liquidation preferences. Of the total preferred shares authorized, 500,000 have been designated as Series A Preferred Stock (“Series A Preferred Stock”), pursuant to the Certificate of Designation filed with the Secretary of State of the State of Delaware on December 9, 2014. James Nathanielsz, the Company’s Chief Executive Officer and Chief Financial Officer, beneficially owns all of the outstanding shares of Series A Preferred Stock via North Horizon Pty Ltd., which entitles him, as a holder of Series A Preferred Stock, to vote on all matters submitted or required to be submitted to a vote of the Company’s stockholders, except election and removal of directors, and each share of Series A Preferred Stock entitles him to two votes per share of Series A Preferred Stock. North Horizon Pty Ltd. is a Nathanielsz Family Trust. Mr. James Nathanielsz, the Chief Executive Officer, Chief Financial Officer and a director of our Company, has voting and investment power over these shares. 500,000 shares of Series A Preferred Stock are issued and outstanding as of June 30, 2021 and 2020. F- 26 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Of the total preferred shares authorized, pursuant to the Certificate of Designation filed with the Secretary of State of the State of Delaware on June 16, 2015, up to five shares have been designated as Series B Preferred Stock (“Series B Preferred Stock”). Each holder of outstanding shares of Series B Preferred Stock is entitled to voting power equivalent to the number of votes equal to the total number of shares of common stock outstanding as of the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company and entitled to vote on all matters submitted or required to be submitted to a vote of the stockholders of the Company. One share of Series B Preferred Stock is issued and outstanding as of June 30, 2021 and 2020. Mr. Nathanielsz directly beneficially owns such one share of Series B Preferred Stock. No additional shares of Series A Preferred Stock or Series B Preferred Stock were issued during fiscal year 2021 and 2020. Common Stock Shares Issued for Cash April 3, 2020 Security Purchase Agreement On April 3, 2020, the Company closed on a transaction related to a Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into on March 30, 2020, whereby an investor (the “Investor”) purchased from the Company, 7,500 units (the “Units”), each consisting of (i) 1.5 shares of the Company’s common stock (the “Common Stock”), or pre-funded warrants (the “Prefunded Warrants”) upon Investor’s election due to the 4.99% blocker provision as discussed below and (ii) 1.5 warrants to purchase one share of Common Stock (“Series A Warrants”, and collectively with the Common Stock the “Units”). In addition to the Units, the Investor was issued 63,750 warrants to purchase one share of Common Stock (the “Series B Warrants”) and an additional 63,750 warrants to purchase one share of Common Stock, subject to a vesting schedule (the “Series C Warrants” and, together with the Prefunded Warrants, the Series A Warrants, and the Series B Warrants, the “Warrants”). The aggregate purchase price for the Units, the Series A Warrants with exercise price of $ 200 per share, the Series B Warrants with exercise price of $ 40 per share and the Series C Warrants with exercise price of $ 200 per share, of $ 450,000 was paid at closing (the “Purchase Price”) or $60 per unit purchase price (see Warrants below). The Company received net proceeds of $ 424,990 , net of offering cost of $ 25,010 . The Securities Purchase Agreement contains a blocker provision whereby the Investor or any of its affiliates would not beneficially own in excess of 4.99 % of the outstanding number of shares of Common Stock (“Beneficial Ownership Limitation”). As such, the Investor may elect to purchase Prefunded Warrants equal to the same number of shares of Common Stock that the Company would have been issued. Due to the Beneficial Ownership Limitation, the 11,250 shares of Common Stock underlying the Units issuable at closing of the Securities Purchase Agreement are comprised of 804 shares of restricted Common Stock and 10,446 Prefunded Warrants with exercise price of $ 1 (but can be less than par value). The Prefunded Warrants shall be exercisable immediately and shall expire when exercised in full. The Securities Purchase Agreement contains such representations, warranties and covenants as are typical for a transaction of this nature. Shares issued for conversion of convertible debt During the year ended June 30, 2020, the Company issued 247,619 shares of its common stock at an average contractual conversion price of $ 7 , ranging from $ 2 to $ 910 , as a result of the conversion of principal and interest in the aggregate amount of $ 1,814,336 underlying certain outstanding principal amount and accrued interest of convertible notes converted during such period, including $ 15,000 of conversion fees. The total recorded to equity was $ 2,125,174 . Notes with principal amounts totaling $ 254,500 and accrued interest of $ 15,408 contained bifurcated embedded conversion option derivatives. Accordingly, the fair market value of the shares issued was $ 565,746 resulting in a loss on extinguishment at the time of conversion of $ 295,838 and $ 362,961 of derivative fair value was recorded as a gain on extinguishment at the time of conversion. The Company reclassified $ 874,924 in put premiums to additional paid in capital following conversions during the year ended June 30, 2020. During the year ended June 30, 2021, the Company issued an aggregate of 8,786,113 shares of its common stock at an average contractual conversion price of $ 0.13 , ranging from $ 0.03 to $ 2.00 , as a result of the conversion of principal of $ 1,018,867 , interest of $ 103,321 and conversion fees $ 16,500 underlying certain outstanding convertible notes converted during such period. The total recorded to equity was $ 1,239,075 prior to the reversal of unissued shares. F- 27 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 There were 24,427 unissued shares which were considered issuable for accounting purposes during the first quarter of fiscal 2021 related to conversion notices dated and received in September 2020. In November 2020, the Company was notified by the note holder of the cancellation of these conversion notices and as such the Company reversed the effects of these transactions thereby increasing the principal balance by $ 19,600 , accrued interest of $ 416 and put premium by $ 11,785 and a corresponding decrease in equity of $ 31,801 . Converted notes totaling principal amount of $ 95,000 and accrued interest of $ 3,000 contained bifurcated embedded conversion option derivatives. Accordingly, the fair market value of the shares issued was $ 178,368 resulting in a loss on extinguishment at the time of conversion of $ 80,368 and $ 130,975 of derivative fair value was recorded as a gain on extinguishment at the time of conversion. The Company reclassified $ 590,504 to additional paid in capital following conversions of notes accounted for as stock settled debt during the year ended June 30, 2021. The Company has 197,308,116 shares of its common stock reserved for future issuances based on lender reserve requirements pursuant to underlying financing agreements at June 30, 2021. Shares issued for services On July 19, 2019, the Company entered into an agreement with a certain consultant to provide services over a two-month period beginning July 1, 2019 and ending September 1, 2019 in exchange for 20 shares of the Company’s common stock. On July 19, 2019, the Company issued the 20 shares of the Company’s common stock valued at $ 1,990 per share; being the closing price of the stock on the date of the agreement, to such consultant, or $ 39,800 , which will be amortized over the term of the agreement. The Company recorded $ 39,800 of consulting expense with respect to such shares of its common stock during the year ended June 30, 2020. Between February 3, 2020 and June 26, 2020, the Company issued an aggregate of 8,709 shares of the Company’s common stock to a consultant for services rendered pursuant to an engagement agreement dated on September 10, 2019 which agreement was later amended in February 2020. Between February 3, 2020 and June 26, 2020, the Company issued an aggregate of 8,709 shares of the Company’s common stock valued at an average price of $ 8 per share; being the closing price of the stock on the date of the agreement, to such consultant, or $ 73,842 . The Company recorded $ 73,842 of consulting expense with respect to such shares of its common stock during the year ended June 30, 2020. On March 22, 2021, the Company issued an aggregate of 225,037 shares of the Company’s common stock to a consultant for services rendered from January 1, 2021 to March 22, 2021. The Company issued 225,037 shares of the Company’s common stock valued at $ 0.30 per share, being the closing price of the stock on the date of grant to such consultant, or $ 67,511 . The Company recorded $ 67,511 of consulting expense with respect to such shares of its common stock during the year ended June 30, 2021. Between March 2021 and June 2021, the Company issued an aggregate of 580,609 shares of the Company’s common stock to a consultant for services rendered from April 1, 2021 to June 30, 2021. The Company issued 580,609 shares of the Company’s common stock valued at $ 0.10 per share, being the closing price of the stock on the date of grant to such consultant, or $ 58,061 . The Company recorded $ 58,061 of consulting expense with respect to such shares of its common stock during the year ended June 30, 2021. Shares issued for exercise of warrants During the year ended June 30, 2021, the Company received aggregate gross proceeds of $ 776,044 from the exercise of 10,445 prefunded warrants and 19,375 Series B Warrants resulting in the issuance of 29,820 shares of common stock. Additionally, during 2021 the Company issued 4,199,979 shares of common stock from the alternate cashless exercise of 20 Series A and 1 Series C warrants. The Company recognized the value of the effect of a down round feature in such warrants when triggered. Upon the occurrence of the triggering event that resulted in a reduction of the strike price, the Company measured the value of the effect of the feature as the difference between the fair value of the warrants without the down round feature or before the strike price reduction and the fair value of the warrants with a strike price corresponding to the reduced strike price upon the down round feature being triggered. Accordingly, the Company recognized deemed dividend of $ 391,749 and a corresponding reduction of income available to common stockholders upon the alternate cashless exercise of these warrants. Restricted Stock Units Pursuant to employment agreements dated in May 2019, the Company granted an aggregate of 78 and 39 restricted stock unit to the Company’s Chief Executive Officer and Chief Scientific Officer, respectively. The total 117 restricted stock units are subject to vesting terms as defined in the employment agreements. The 117 restricted stock units were valued at the fair value of $ 4,250 per unit or $ 497,240 based on the quoted trading price on the date of grant. During the year ended June 30, 2021 and 2020, the Company recognized stock-based compensation of $ 0 and $ 217,543 , respectively, related to vested restricted stock units. There were $ 248,620 unrecognized restricted stock units expense as of June 30, 2021. There are 59 unvested restricted stock units which are subject to various performance conditions which have not yet been met and such restricted stock units have not yet vested as of June 30, 2021 and 2020 to which the $ 248,620 relates. F- 28 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Options A summary of the Company’s option activity during the years ended June 30, 2021 and 2020 is presented below: SCHEDULE OF STOCK OPTION ACTIVITY Number of Weighted Average Options Price Per Share Outstanding at June 30, 2019 60 $ 76,370 Issued - - Exercised - - Expired - - Outstanding at June 30, 2020 60 $ 76,370 Issued - - Exercised - - Expired ( 1 ) 3,750,000 Outstanding at June 30, 2021 59 $ 13,730 Exercisable at June 30, 2021 40 $ 18,193 Outstanding and Exercisable: Weighted average remaining contractual term 7.86 Weighted average fair value of options granted during the period $ - Aggregate intrinsic value $ - On the Effective Date, the Company’s board of directors approved and adopted the Company’s 2019 Equity Incentive Plan (the “2019 Plan”), which reserves a total of 234 shares of the Company’s common stock for issuance under the 2019 Plan. Incentive awards authorized under the 2019 Plan include, but are not limited to, incentive stock options, non-qualified stock options, restricted stock awards and restricted stock units. During the year ended June 30, 2021 and 2020, the Company recognized stock-based compensation of $ 82,872 and $ 82,873 related to vested stock options. There was $ 72,514 of unvested stock options expense as of June 30, 2021 that will be recognized over a remaining vesting period of 0.87 year. No stock options were granted during the years ended June 30, 2021 and 2020. Warrants The following table summarizes warrant activity for the years ended June 30, 2021 and 2020: SCHEDULE OF WARRANT ACTIVITY Number of Weighted Average Warrants Price Per Share Outstanding at June 30, 2019 - $ - Issued 151,170 150.00 Exercised - - Forfeited - - Expired - - Outstanding at June 30, 2020 151,170 $ 150.00 Issued - - Exercised ( 29,841 ) 26.15 Forfeited - - Expired - - Outstanding at June 30, 2021 121,329 $ 179.63 Exercisable at June 30, 2021 76,955 $ 283.21 Outstanding and Exercisable: Weighted average remaining contractual term 1.77 Aggregate intrinsic value $ - F- 29 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 In connection with the issuance of the August 2019 Auctus Note, the Company issued common stock purchase warrants to Auctus to purchase 450 shares of the Company’s common stock (the “First Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such First Warrant at an “Exercise Price” of $ 2,250 . In connection with the issuance of the Note, the Company shall issue a common stock purchase warrant to Buyer to purchase 300 shares of the Company’s common stock (the “Second Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such Second Warrant at an “Exercise Price” of $ 3,330 . In connection with the issuance of the Note, the Company shall issue a common stock purchase warrant to Buyer to purchase 225 shares of the Company’s common stock (the “Third Warrant”) as a commitment fee upon the terms and subject to the limitations and conditions set forth in such Third Warrant at an “Exercise Price” of $ 4,500 . The First Warrant, Second Warrant, and Third Warrant shall collectively be referred as the “Warrants”. The Warrants have an “Exercise Period” of five years from the date of issuance being August 30, 2019 (see Note 6). On September 10, 2019, the Company entered into an agreement with a certain consultant to provide services over a three-month period beginning September 10, 2019 and ending December 10, 2019 in exchange for 1,000 warrants to purchase the Company’s common stock at $ 2,000 per share with an expiry date of September 10, 2022 . The Fair Market Value of the warrants was $ 984,810 on the date of grant as calculated under the Black Scholes Option Pricing model. The Company recorded $ 984,810 of share-based compensation expenses with respect to the grant of such warrants during the year ended June 30, 2020. In connection with the issuance of shares on April 3, 2020 as discussed above, the Company closed on a transaction related to a Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into on March 30, 2020, whereby an investor purchased from the Company, 7,500 units, each consisting of (i) 1.5 shares of the Company’s common stock, or pre-funded warrants upon Investor’s election due to the 4.99% blocker provision and (ii) 1.5 warrants to purchase one share of Common Stock (“Series A Warrants”, and collectively with the Common Stock the “Units”) . In addition to the Units, the Investor was issued 63,750 warrants to purchase one share of Common Stock (the “Series B Warrants”) and an additional 63,750 warrants to purchase one share of Common Stock, subject to a vesting schedule (the “Series C Warrants” and, together with the Prefunded Warrants, the Series A Warrants, and the Series B Warrants, the “Warrants”). Due to the Beneficial Ownership Limitation, the Company granted 10,445 Prefunded Warrants with exercise price of $ 0.10 (but can be less than par value). The Prefunded Warrants shall be exercisable immediately and shall expire when exercised in full. Series A Warrants Pursuant to the Securities Purchase Agreement entered into March 20, 2020 as discussed above, the Investor purchased Series A Warrants to purchase up to 11,250 shares of Common Stock, subject to adjustment as provided therein. The Series A Warrants have a cash exercise price of $ 200 per share and are immediately exercisable and expire in 3 years. The Series A Warrants contain a provision for cashless exercise in the event there is no effective registration statement registering the shares underlying the Series A Warrants calculated based on the difference between the exercise price of the Series A Warrant and the trading price of the stock (the “Cashless Exercise”).Additionally, the Series A Warrants contain a provision for a cashless conversion at the Holder’s option should the trading price of the Common Stock fall below $200 per share calculated based on the difference between the exercise price of the Series A Warrant and 70% of the Market Price, as defined therein (the” Alternate Cashless Exercise”). See above “Shares issued for exercise of warrants” for discussion of deemed dividend related to alternate cashless exercise. Series B Warrants Pursuant to the Securities Purchase Agreement entered into March 20, 2020 as discussed above, the Investor purchased Series B Warrants to purchase up to 63,750 shares of Common Stock, subject to adjustment as provided therein; provided, however, commencing on the 90th day following the effective date, the Company may reduce the number of Warrant Shares issuable upon exercise thereof by 37,500 upon 10 Trading Days’ prior written notice to the Holder provided that the Company issues to the Holder 3,750 shares of Common Stock (or, at the election of the Holder, an equivalent number of pre-funded warrants) and Series A Warrants to purchase up to 3,750 shares of Common Stock, which shares shall be issued pursuant to a registration statement without restrictions on resale. The Series B Warrants have a cash exercise price of $ 40 per share and expire in 3 years. The Series B Warrants contain a provision for Cashless Exercise. Series C Warrants Pursuant to the Securities Purchase Agreement entered into March 20, 2020 as discussed above, the Investor purchased Series C Warrants to purchase up to 63,750 shares of Common Stock, subject to adjustment as provided therein and expire in 3 years. The Series C Warrants have a cash exercise price of $ 200 per share, subject to a vesting schedule, which is based on such Holder’s exercise of the Series B Warrants (warrants shall be exercisable ratably upon exercise of Series B Warrants). The Series C Warrants contain provisions for Cashless Exercise and Alternate Cashless Exercise. F- 30 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Exercise of Warrants During the year ended June 30, 2021, the Company received aggregate gross proceeds of $ 776,044 from the exercise of 10,445 prefunded warrants and 19,375 Series B Warrants resulting in the issuance of 29,820 shares of common stock. Additionally, the Company issued 4,199,979 shares of common stock from the alternate cashless exercise of 20 Series A and 1 Series C warrants. NOTE 9 – COMMITMENTS AND CONTINGENCIES Legal Matters On September 26, 2019, a complaint was filed against the Company with Supreme Court of the State of New York, County of New York, by Foley Shechter Ablovatskiy LLP (“Foley Shechter”), our former counsel, seeking $ 151,031 in professional fees allegedly owed, in addition to interest and costs of suit. The Company filed an answer, together with affirmative defenses and counterclaims. Certain amounts related to this claim were included in accounts payable and accrued expenses in the accompanying consolidated financial statements at June 30, 2020. On March 22, 2021, the Company entered into a settlement agreement with Foley Shechter whereby both parties agreed to settle all claims for professional fees owed for a total of $ 51,032 . The Company paid the settlement amount of $ 51,032 on March 22, 2021. Prior to the settlement agreement, the Company recorded total accounts payable and accrued expenses $ 142,660 . Accordingly, the Company recognized gain from settlement of debt of $ 92,556 during the year ended June 30, 2021. Regal Consulting, LLC (“Regal”) initiated litigation against the Company in Clark County District Court, Nevada. Regal was demanding approximately $ 400,000 and 60 shares of the Company’s common stock as payment for services that Regal purports to have performed. Regal additionally claimed that $ 106,500 remained due on a Convertible Note executed by the Company in May of 2017 and asserted that it was owed in excess of $ 100,000 in penalties in connection with the Company’s refusal to honor certain Conversion Notices. The Company filed an Answer and Counterclaim, denying liability and alleging that Regal procured by fraud the Company’s execution of various consulting agreements and additionally failed to provide the consulting services contemplated by said agreements. On December 23, 2020, the parties mediated their dispute and negotiated a settlement agreement. On March 15, 2021, the Company entered into a Settlement and Mutual Release Agreement with Regal whereby both parties agreed to settle all claims and liabilities under the August 10, 2017 Convertible note (see Note 6) for a total of $ 100,000 . All other terms of the August 10, 2017 Convertible Note shall remain in full force and effect. Both parties agree that all future penalties under this convertible note are waived unless the Company fails to authorize the issuance of the requested shares upon conversion. The Company has the right to pay off the balance of any remaining amounts dues under this convertible note in cash at any time 61 days after March 15, 2021. Prior to the Settlement Agreement, the Company recorded total liabilities $ 56,762 consisting of remaining principal amount of $ 8,500 , accrued interest of $ 23,262 and accrued expenses of $ 25,000 . Accordingly, the Company recognized loss from settlement of debt of $ 43,238 during the year ended June 30, 2021. IRS Liability As part of its requirement for having a foreign operating subsidiary, the Company’s parent U.S. entity is required to file an informational Form 5471 to the Internal Revenue Service (the “IRS”), which is a form that explains the nature of the relationship between the foreign subsidiary and the parent company. From 2012 through the 2014, the Company did not file this form in a timely manner. As a result of the non-timely filings, the Company incurred a penalty from the IRS in the amount of $ 10,000 per year, or $ 30,000 in total, plus accrued interest, such penalty and interest having been accrued and is included in the accrued expenses and other payable figure in the June 30, 2021 and 2020 consolidated balance sheet. The Company recorded the penalties for all three years during the year ended June 30, 2018. The Company is current on all subsequent filings. The Company’s tax advisor is awaiting a response from the IRS on this matter. Operating Agreements In November 2009, the Company entered into a commercialization agreement with the University of Bath (UK) (the “University”) whereby the Company and the University co-owned the intellectual property relating to the Company’s pro-enzyme formulations. In June 2012, the Company and the University entered into an assignment and amendment whereby the Company assumed full ownership of the intellectual property while agreeing to pay royalties of 2 % of net revenues to the University. Additionally, the Company agreed to pay 5 % of each and every license agreement subscribed for. The contract is cancellable at any time by either party. To date, no amounts are owed under the agreement. Operating Leases On May 5, 2016, the Company entered into a new five -year operating lease agreement with a Horizon Pty Ltd., a related party, of which Mr. Nathanielsz, our CEO, CFO and a director, and his wife are owners and directors, with monthly rent currently at $ 3,606 AUD or $ 2,469 USD, inclusive of GST (See Note 10 – Related Party Transactions). The initial rental amount was $3,000 AUD and subject to 3% yearly escalation. In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On July 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets $ 48,662 and total lease liabilities of $ 48,662 based on an incremental borrowing rate of 6 % . Such lease expired in May 2021 and was renewed for another one-year term from May 2021 to May 2022 . The Company is currently obligated to pay $ 3,606 AUD or $ 2,431 USD (depending on exchange rate), inclusive of tax, in rent per month. F- 31 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 ROU is summarized below: SCHEDULE OF RIGHT USE OF ASSET June 30, 2021 June 30, 2020 Office lease (24 months) $ 48,662 $ 48,662 Less accumulated amortization ( 48,662 ) ( 26,980 ) Right-of-use asset, net $ - $ 21,682 Operating Lease liabilities are summarized below: SCHEDULE OF OPERATING LEASE LIABILITY June 30, 2021 June 30, 2020 Office lease $ 48,662 $ 48,662 Reduction of lease liability ( 48,662 ) ( 23,590 ) Long term portion of lease liability $ - $ 25,072 Collaboration Agreement On September 13, 2018, the Company entered into a two-year collaboration agreement with the University of Jaén (the “University”) to provide certain research services to the Company. In consideration of such services, the Company agreed to pay the University approximately 52,000 Euros ($ 59,508 USD) in year one and a maximum of 40,000 Euros ($ 45,775 USD) in year two. The Company paid 31,754 Euros ($ 36,117 USD) in 2019 and has accrued 28,493 Euros ($ 24,043 USD) as of June 30, 2021. Additionally, in exchange for full ownership of the intellectual property the Company agreed to pay royalties of 2 % of net revenues to the University. On October 1, 2020, the Company entered into another two-year collaboration agreement with the University of Jaén to provide certain research services to the Company. In consideration of such services, the Company agreed to pay the University approximately 30,000 Euros ($ 35,145 USD) which shall be paid in four installment payment of 5,000 Euros in November 2020, 5,000 Euros ($ 5,858 ) in March 2021, 10,000 Euros ($ 11,715 ) in December 2021 and 10,000 Euros ($ 11,715 ) in September 2022. Additionally, the University shall hire and train a doctoral student for this project and as such the Company shall pay the University 25,837 Euros ($ 30,268 USD). In exchange for full ownership of the intellectual property the Company agreed to pay royalties of 2 % of net revenues to the University. NOTE 10 – RELATED PARTY TRANSACTIONS Since its inception, the Company has conducted transactions with its directors and entities related to such directors. These transactions have included the following: As of June 30, 2021 and 2020, the Company owed its former director a total of $ 55,500 and $ 50,993 , respectively, for money loaned to the Company throughout the years. The total loans balance owed at June 30, 2021 and 2020 is not interest bearing (See Note 5 – Loans and Notes Payable). As of June 30, 2021 and 2020, the Company owed its former director a total of $ 33,347 and $ 30,639 , respectively, related to expenses paid on behalf of the Company related to corporate startup costs and intellectual property (See Note 4 – Due to Former Director – Related Party). Effective May 5, 2016, the Company entered into an agreement for the lease of its principal executive offices with North Horizon Pty Ltd., a related party, of which Mr. Nathanielsz, our CEO, CFO and a director, and his wife are owners and directors. The lease has a five -year term and provides for annual rental payments of $ 39,600 AUD or $ 28,325 USD, which includes $ 3,600 AUD or $ 2,575 USD of goods and service tax for total payments of $ 198,000 AUD or $ 141,629 USD during the term of the lease. As of June 30, 2021, total rent payable of $ 86,129 AUD ($ 64,597 USD) is included in accrued expenses in the accompanying consolidated balance sheet. Such lease expired in May 2021 and was renewed for another one-year term from May 2021 to May 2022 (See Note 9 – Commitments and Contingencies). F- 32 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Employment and Services Agreements with Management The Company and Mr. Nathanielsz entered into an employment agreement as of February 25, 2015 (the “Nathanielsz Employment Agreement”) setting forth the terms and conditions of Mr. Nathanielsz employment as the Company’s President and Chief Executive Officer. The Nathanielsz Employment Agreement was scheduled to expire on February 25, 2019 ; however, the term of the Nathanielsz Employment Agreement automatically renews for successive one-year periods unless either party provides 30 days’ prior written notice of its intent not to renew. The Nathanielsz Employment Agreement continues in effect as of June 30, 2021 as amended May 14, 2019 (see below). The Nathanielsz Employment Agreement provides Mr. Nathanielsz with a base salary of $ 25,000 AUD per month ($ 300,000 AUD annually or $ 205,680 USD) and a monthly contribution to Mr. Nathanielsz’s pension equal to 9.5 % of his monthly salary. Mr. Nathanielsz has the ability to convert any accrued but unpaid salary into common stock at the end of each fiscal year at a conversion price to be determined by Mr. Nathanielsz and the Company, which will in no event be lower than par value or higher than the closing bid price on the date of conversion. Pursuant to the Nathanielsz Employment Agreement, Mr. Nathanielsz is entitled to an annual discretionary bonus in an amount up to 200 % of his annual base salary, which bonus shall be determined by the Company’s board of directors based upon the performance of the Company. On March 16, 2018, the Company’s board of directors approved an increase of Mr. Nathanielsz’s annual base salary from $ 300,000 AUD ($ 205,680 USD) to $ 400,000 AUD ($ 274,240 USD), effective February 2018. Mr. Nathanielsz’s wife, Sylvia Nathanielsz, is and has been a non-executive part-time employee of the Company since October 2015. Effective February 1, 2018, Mrs. Nathanielsz receives an annual salary of $ 120,000 AUD ($ 80,904 USD) and is entitled to customary benefits. Pursuant to a February 25, 2016 board resolution, James Nathanielsz shall be paid $ 4,481 AUD ($ 3,205 USD), on a monthly basis for the purpose of acquiring and maintaining an automobile. For the year ended June 30, 2020, a total of $ 44,918 AUD ($ 30,284 USD) in payments have been made with respect to Mr. Nathanielsz’s car allowance. For the year ended June 30, 2021, a total of $ 46,135 AUD ($ 34,476 USD) in payments have been made with respect to Mr. Nathanielsz’s car allowance. Pursuant to the approval of the Company’s board of directors, on May 14, 2019, Mr. Nathanielsz was granted a $ 460,000 AUD ($ 315,376 USD) bonus for accomplishments achieved while serving as the Company’s Chief Executive Officer during the fiscal year ended June 30, 2019 with $ 200,000 AUD ($ 137,120 USD) of such bonus payable by the Corporation to the CEO throughout the Corporation’s 2019 fiscal year as the Corporation’s cash resources allow, with the remaining $ 260,000 AUD ($ 178,256 USD) of such bonus to be deferred by the CEO until a future date when the Corporation’s cash resources allow for such payment, as agreed to by the CEO. A total of $ 90,000 AUD ($ 64,377 USD) in payments were made in the year ended June 30, 2019. On July 13, 2020, the Board approved a bonus of $ 240,000 AUD being equal to 60 % of Mr. Nathanielsz base salary which was accrued as of June 30, 2020. A total of $ 202,620 AUD ($ 136,606 USD) in payments were made against the bonuses during the year ended June 30, 2020 which resulted to a remaining balance of $ 407,380 AUD ($ 280,726 USD) bonus payable as of June 30, 2020. On August 12, 2021, the Board approved a bonus of $ 177,840 USD. A total of $ 221,890 AUD ($ 166,418 USD) in payments were made against the bonuses during the year ended June 30, 2021 resulting in a remaining balance of $ 422,610 AUD ($ 316,957 USD) bonus payable as of June 30, 2021 which is included in accrued expenses in the accompanying consolidated balance sheet. On August 12, 2021, pursuant to the Cancellation Agreement, Mr. Nathanielsz agreed to cancel $ 177,840 of the bonus payable in exchange for 5,928,000 shares of the common stock of the Company (see Note 13). Amended and Restated Employment Agreement - On May 14, 2019 (the “Effective Date”), the Company entered into an Amended and Restated Employment Agreement (the “Employment Agreement”) with James Nathanielsz, the Company’s Chief Executive Officer, Chairman, acting Chief Financial Officer and a director, for a term of three years , subject to automatic one -year renewals, at an annual salary of $ 400,000 AUD. Pursuant to the Employment Agreement, Mr. Nathanielsz was granted options to purchase 39 shares of the Company’s common stock (the “Nathanielsz Options”), with an exercise price per share of $ 4,675 ( 110 % of the closing market price of the Company’s common stock on May 14, 2019 (or $ 4,250 ), the date of approval of such grant by the Company’s board of directors), (ii) 39 restricted stock units of the Company (the “Initial Nathanielsz RSUs”), and (iii) an additional 39 restricted stock units of the Company (the “Additional Nathanielsz RSUs”). Such options and restricted stock units were granted pursuant to the 2019 Plan approved by the Company’s board of directors on the Effective Date. The Nathanielsz Options have a term of 10 years from the date of grant. 1/3rd of the Nathanielsz Options shall vest every successive one-year anniversary following the Effective Date, provided, that on each such vesting date Mr. Nathanielsz is employed by the Company and subject to the other provisions of the Employment Agreement. The Initial Nathanielsz RSUs shall vest on the one-year anniversary of the Effective Date, subject to Mr. Nathanielsz’s continued employment with the Company through such vesting date. The Additional Nathanielsz RSUs will vest as follows, subject to Mr. Nathanielsz’s continued employment with the Company through the applicable vesting date: (i) 7.80 of the Additional Nathanielsz RSUs shall vest upon the Company submitting Clinical Trial Application (the “CTA”) for PRP, the Company’s lead product candidate (“PRP”), for a First-In-Human study for PRP (the “Study”) in an applicable jurisdiction to be selected by the Company, (ii) 7.80 of the Additional Nathanielsz RSUs shall vest upon the CTA being approved in an applicable jurisdiction, (iii) 7.80 of the Additional RSUs shall vest upon the Company completing an equity financing in the amount of at least $ 4,000,000 in gross proceeds, (iv) 7.80 of the Additional Nathanielsz RSUs shall vest upon the shares of the Company’s Common Stock being listed on a senior stock exchange (NYSE, NYSEMKT or NASDAQ), and (v) the remaining 7.80 of the Additional Nathanielsz RSUs shall vest upon the Company enrolling its first patient in the Study. Each vested restricted stock unit shall be settled by delivery to Mr. Nathanielsz of one share of the Company’s common stock and/or the fair market value of one share of common stock in cash, at the sole discretion of the Company’s board of directors and subject to the 2019 Plan, on the first to occur of: (i) the date of a Change of Control (as defined in the Employment Agreement), (ii) the date that is ten business days following the vesting of such restricted stock unit, (iii) the date of Mr. Nathanielsz’s death or Disability (as defined in the Employment Agreement), and (iv) Mr. Nathanielsz’s employment being terminated either by the Company without Cause or by Mr. Nathanielsz for Good Reason (each as defined in the Employment Agreement). In the event of a Change of Control, any unvested portion of the Nathanielsz Options and such restricted stock units shall vest immediately prior to such event. The 39 vested restricted stock unit are considered issuable as of June 30, 2021. F- 33 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Amended and Restated Services Agreement - On May 14, 2019, the Company also entered into an Amended and Restated Services Agreement (the “Services Agreement”) with Dr. Kenyon, the Company’s Chief Scientific Officer and a director, for a term of three years, subject to automatic one -year renewals, at an annual salary of $ 54,000 AUD. In connection with the execution of the Services Agreement, Dr. Kenyon was designated as an executive officer of the Company and assumed a more active executive role with the Company. Pursuant to the Services Agreement, Dr. Kenyon was granted options to purchase 20 shares of the Company’s common stock (the “Kenyon Options”), with an exercise price per share of $ 4,250 ( 100 % of the closing market price of the Company’s common stock on May 14, 2019, the date of approval of such grant by the Company’s board of directors), (ii) 20 restricted stock units of the Company (the “Initial Kenyon RSUs”), and (iii) an additional 20 restricted stock units of the Company (the “Additional Kenyon RSUs”). Such options and restricted stock units were granted pursuant to the 2019 Plan approved by the Company’s board of directors on the Effective Date. The Kenyon Options have a term of 10 years from the date of grant. 1/3rd of the Kenyon Options shall vest every successive one-year anniversary following the Effective Date, provided, that on each such vesting date Dr. Kenyon is employed by the Company and subject to the other provisions of the Services Agreement. The Initial Kenyon RSUs shall vest on the one-year anniversary of the Effective Date, subject to Dr. Kenyon’s continued employment with the Company through such vesting date. The Additional Kenyon RSUs will vest as follows, subject to Dr. Kenyon’s continued employment with the Company through the applicable vesting date: (i) 5 of the Additional Kenyon RSUs shall vest upon the Company submitting the CTA for PRP for the Study in an applicable jurisdiction to be selected by the Company, (ii) 5 of the Additional Kenyon RSUs shall vest upon the Company completing an equity financing in the amount of at least $ 4,000,000 in gross proceeds, (iii) 5 of the Additional Kenyon RSUs shall vest upon the shares o f the Company’s Common Stock being listed on a senior stock exchange (NYSE, NYSEMKT or NASDAQ), and (iv) the remaining 5 of the Additional Kenyon RSUs shall vest upon the Company enrolling its first patient in the Study. Each vested Kenyon RSU shall be settled by delivery to Mr. Kenyon of one share of the Company’s common stock and/or the fair market value of one share of common stock in cash, at the sole discretion of the Company’s board of directors and subject to the Plan, on the first to occur of: (i) the date of a Change of Control (as defined in the Services Agreement), (ii) the date that is ten business days following the vesting of such Kenyon RSU, (iii) the date of Dr. Kenyon’s death or Disability (as defined in the Services Agreement), and (iv) Dr. Kenyon’s employment being terminated either by the Company without Cause or by Dr. Kenyon for Good Reason (as defined in the Services Agreement). In the event of a Change of Control (as defined in the Services Agreement), 50% of any unvested portion of the Kenyon Options and the Kenyon RSUs shall vest immediately prior to such event. As of June 30, 2021, total accrued salaries of $ 135,000 AUD ($ 101,250 USD) is included in accrued expenses in the accompanying consolidated balance sheet. The 20 vested restricted stock unit are considered issuable as of June 30, 2021. On August 12, 2021, pursuant to the Cancellation Agreement, Mr. Kenyon agreed to cancel accrued salaries of $ 102,600 in exchange for 3,420,000 shares of the common stock of the Company (see Note 13). Intercompany Loans All Intercompany loans were made by the parent to the subsidiary, Propanc PTY LTD, which have not been repaid as of June 30, 2021. Effective fiscal year 2021, the parent company determined that intercompany loans will not be repaid in the foreseeable future and thus, per ASC 830-20-35-3, gains and losses from measuring the intercompany balances are recorded within cumulative translation adjustment, a component of other comprehensive income. Prior to July 1, 2020, the Company recorded the foreign currency transaction gains and losses from measuring the intercompany balances as a component of other income (expenses) as reflected in the consolidated statements of operations. NOTE 11 – CONCENTRATIONS AND RISKS Concentration of Credit Risk The Company maintains its cash in banks and financial institutions in Australia. Bank deposits in Australian banks are uninsured. The Company has not experienced any losses in such accounts through June 30, 2021. In fiscal year 2020, t he Company currently primarily relied on funding from three convertible debt lenders. Proceeds received during the year ended June 30, 2020 from each of the three lenders were $ 285,000 , $ 505,000 , and $ 227,000 , respectively, which represents approximately 19 % , 34 % and 15 % , respectively of total proceeds received by the Company during fiscal year 2020. In fiscal year 2021, the Company primarily relied on funding from two convertible debt lenders and received net proceeds after deductions of $ 16,000 for original issue discounts and debt issue costs during the year ended June 30, 2021 from each of the two lenders of $ 125,000 and $ 200,000, respectively, which represents approximately 39 % , and 61 %, respectively of total proceeds received by the Company during fiscal year 2021. Receivable Concentration As of June 30, 2021 and 2020, the Company’s receivables were 100 % related to reimbursements on GST taxes paid. F- 34 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Patent and Patent Concentration The Company has filed multiple patent applications relating to its lead product, PRP. The Company’s lead patent application has been granted and remains in force in the United States, Belgium, Czech Republic, Denmark, France, Germany, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, Switzerland, Liechtenstein, Turkey, United Kingdom, Australia, China, Japan, Indonesia, Israel, New Zealand, Singapore, Malaysia, South Africa, Mexico, Republic of Korea, India and Brazil. In Canada, the patent application remains under examination. In 2016 and early 2017, we filed other patent applications. Three applications were filed under the Patent Cooperation Treaty (the “PCT”). The PCT assists applicants in seeking patent protection by filing one international patent application under the PCT, applicants can simultaneously seek protection for an invention in over 150 countries. Once filed, the application is placed under the control of the national or regional patent offices, as applicable, in what is called the national phase. One of the PCT applications filed in November 2016, entered national phase in July 2018 and another PCT application is currently entering national phase in August 2018. A third PCT application entered the national phase in October 2018. In July 2020, a world first patent was granted in Australia for the cancer treatment method patent family. Presently, there are 31 granted patents and 34 patents under examination in key global jurisdictions relating to the use of proenzymes against solid tumors, covering the lead product candidate PRP. Further patent applications are expected to be filed to capture and protect additional patentable subject matter based on the Company’s field of technology relating to pharmaceutical compositions of proenzymes for treating cancer. Foreign Operations As of June 30, 2021 and 2020, the Company’s operations are based in Camberwell, Australia, however the majority of research and development is being conducted in the European Union. On July 22, 2016, the Company formed a wholly owned subsidiary, Propanc (UK) Limited under the laws of England and Wales for the purpose of submitting an orphan drug application with the European Medicines Agency as a small and medium-sized enterprise. As of June 30, 2021 and 2020, there has been no activity within this entity. NOTE 12 - 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 $ 80,000 (1 note) and $ 126,500 (3 notes) of convertible debt, which is treated as derivative instruments outstanding at June 30, 2021 and 2020 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 June 30, 2021, the last trading day of the fiscal year ended June 30, 2021, was $ 0.0517 . Volatility, expected remaining term and risk-free interest rates used to estimate the fair value of derivative liabilities at June 30, 2021 and 2020 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. SCHEDULE OF FAIR VALUE MEASUREMENTS, RECURRING AND NONRECURRING, VALUATION TECHNIQUES Convertible Debt Initial Valuations during the year ended June 30, 2021 Initial Valuations during the year ended June 30, 2020 June 30, 2021 June 30, 2020 Volatility N/A 227 - 279 % 222 % 264 % Expected remaining term N/A 1.00 0.01 0.01 – 0.70 Risk-free interest rate N/A 1.53 – 1.59 % 0.05 % 0.13 – 0.18 % Expected dividend yield N/A None None None F- 35 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 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 June 30, 2021: SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS Balance at June 30, 2021 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 $ 54,220 $ — $ — $ 54,220 Total $ 54,220 $ — $ — $ 54,220 The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020: Balance at June 30, 2020 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 $ 177,009 $ — $ — $ 177,009 Total $ 177,009 $ — $ — $ 177,009 The following is a roll forward for the years ended June 30, 2021 and 2020 of the fair value liability of price adjustable derivative instruments: SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE Fair Value of Liability for Derivative Instruments Balance at June 30, 2019 $ 698,264 Reductions due to conversions ( 362,962 ) Initial fair value of embedded conversion option derivative liability recorded as debt discount 227,000 Initial fair value of embedded conversion option derivative liability recorded as expense 351,461 Change in fair value included in statements of operations ( 736,754 ) Balance at June 30, 2020 177,009 Gain on debt extinguishment ( 130,975 ) Change in fair value included in statements of operations 8,186 Balance at June 30, 2021 $ 54,220 NOTE 13 – SUBSEQUENT EVENTS Exercise of Warrants From July 9, 2021 through September 7, 2021, the Company received aggregate gross proceeds of $ 275,000 from the exercise of 6,875 Series B Warrants and issued 6,875 shares of common stock. Additionally, the Company issued 2,399,988 shares of common stock from the alternate cashless exercise of 12 Series A warrants. Note Conversions From July 1, 2021 through September 20, 2021, the Company issued an aggregate of 6,702,152 shares of its common stock at an average contractual conversion price of $ 0.02 , ranging from $ 0.01 to $ 0.04 , as a result of the conversion of principal of $ 146,348 , interest of $ 4,887 and conversion fees $ 2,250 underlying certain outstanding convertible notes converted during such period. The Company reclassified $ 86,219 in put premiums to additional paid in capital following conversions between July 2021 and September 2021. F- 36 PROPANC BIOPHARMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2021 and 2020 Nathanielsz Cancellation Agreement On August 12, 2021, the Company entered into a Cancellation Agreement with James Nathanielsz (“Nathanielsz”), Chief Executive Officer and Director of the Company, whereby Nathanielsz agreed to cancel his cash compensation bonus award for fiscal year 2021, ended June 30, 2021, in exchange for common stock of the Company. The Company and Nathanielsz entered into an Amended and Restated Employment Agreement dated May 14, 2019 (the “Agreement”). Pursuant to the terms of the Agreement, Nathanielsz was eligible to earn an annual fiscal year cash performance bonus for each fiscal year of his employment period with the Company with a target performance bonus of 200 % of his average annualized base salary during the fiscal year for which the performance bonus is earned. On July 20, 2021, Nathanielsz was awarded a “target” bonus of 78 % , or $ 177,840 USD (the “Debt”) for the fiscal year ended June 30, 2021, by the Company’s Board of Directors (the “Board”). Pursuant to the Cancellation Agreement, Nathanielsz agreed to cancel this Debt in exchange for 5,928,000 shares of the common stock of the Company (the “Shares”), valued at approximately $ 0.03 per share, being the closing price of the stock on the date of grant. The shares were issued on August 17, 2021. Kenyon Cancellation Agreement On August 12, 2021, the Company entered into a Cancellation Agreement with Dr. Julian Kenyon (“Kenyon”), Chief Scientific Officer and Director of the Company, whereby Kenyon agreed to cancel of $ 102,600 USD of accrued salary due him as of June 30, 2021, pursuant to that certain Amended and Restated Services Agreement by and between Kenyon and the Company, dated May 14, 2019, in exchange for 3,420,000 shares of common stock of the Company (the “Shares”), valued at approximately $ 0.03 per share, being the closing price of the stock on the date of grant. The shares were issued on August 17, 2021. Zelinger Amended and Restated Director Agreement On August 12, 2021, the Company entered into an Amended and Restated Director Agreement (the “Director Agreement”) with Josef Zelinger (“Zelinger”). Pursuant to the terms of the Director Agreement, the Company shall pay Zelinger a base salary of $250.00 AUD per month, payable on the first day of each month. In addition, the Company may compensate Zelinger additional consideration for advisory services performed by the Director, either in the form of cash or common stock, at the discretion of the Board. The Company issued 2,800,000 shares of common stock of the Company for accrued director services of $ 84,000 as of June 30, 2021. The 2,800,000 shares of common stock was valued at approximately $ 0.03 per share, being the closing price of the stock on the date of grant. The shares were issued on August 17, 2021. Common Stock Issued for Services On August 12, 2021, the Board approved the issuance of 2,800,000 shares of the Company’s common stock for bonus payable of $ 84,000 as of June 30, 2021 to an employee who is the wife of the CEO of the Company. The 2,800,000 shares of common stock was valued at approximately $ 0.03 per share, being the closing price of the stock on the date of grant. The shares were issued on August 17, 2021. On August 12, 2021, the Board approved the issuance of 166,667 shares of the Company’s common stock for legal services rendered in August 2021 worth $ 5,000 . The 5,000 shares of common stock was valued at approximately $ 0.03 per share, being the closing price of the stock on the date of grant. The shares were issued on September 3, 2021. In September 2021, the Company issued 2,819,712 shares of the Company’s common stock to a consultant for services rendered from July 2021 to September 2021. The Company issued 2,819,712 shares of the Company’s common stock valued at approximately $ 0.04 per share, being the closing price of the stock on the date of grant to such consultant, or approximately $ 113,000 . August 19, 2021 and September 22, 2021 Securities Purchase Agreement Effective August 19, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc., pursuant to which Geneva Roth purchased a convertible promissory note (the “August 19, 2021 Geneva Roth”) from the Company in the aggregate principal amount of $ 103,750 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Geneva Roth any time after the six-month anniversary of the August 19, 2021 Geneva Roth. The August 19, 2021 Geneva Roth contains an original discount of $ 3,750 . The Company intends to use the net proceeds from the August 19, 2021 Geneva Roth for general working capital purposes. The maturity date of the August 19, 2021 Geneva Roth Note is August 19, 2022 . The August 19, 2021 Geneva Roth Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to Geneva Roth in shares of the Company’s common stock; but shall not be payable until the August 19, 2021 Geneva Roth Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. Additionally, effective September 22, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc., pursuant to which Geneva Roth purchased a convertible promissory note (the “September 22, 2021 Geneva Roth”) from the Company in the aggregate principal amount of $ 63,750 , such principal and the interest thereon convertible into shares of the Company’s common stock at the option of Geneva Roth any time after the six-month anniversary of the September 22, 2021 Geneva Roth. The September 22, 2021 Geneva Roth contains an original discount of $ 3,750 . The Company intends to use the net proceeds from the September 22, 2021 Geneva Roth for general working capital purposes. The maturity date of the September 22, 2021 Geneva Roth Note is September 22, 2022. The September 22, 2021 Geneva Roth Note bears interest at a rate of 8 % per annum, which interest may be paid by the Company to Geneva Roth in shares of the Company’s common stock; but shall not be payable until the September 22, 2021 Geneva Roth Note becomes payable, whether at the maturity date or upon acceleration or by prepayment. During the first 60 to 180 days following the date of these notes, the Company has the right to prepay the principal and accrued but unpaid interest due under the above notes issued to Geneva Roth, together with any other amounts that the Company may owe the holder under the terms of the note, at a premium ranging from 110% to 129% as defined in the note agreement. After this initial 180-day period, the Company does not have a right to prepay such notes. The conversion price for the above Geneva Roth notes shall be equal to a 35 % discount of the market price which means the average of the lowest three trading prices of the Common Stock for the ten trading days immediately prior to the delivery of a Notice of Conversion. Notwithstanding the foregoing, Geneva Roth shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Geneva Roth and its affiliates, exceeds 9.99 % of the outstanding shares of the Company’s common stock. These notes are treated as stock settled debt under ASC 480 and accordingly the Company recorded a total of $ 90,192 put premium. The above Geneva Roth notes contain certain events of default, upon which principal and accrued interest will become immediately due and payable. In addition, upon an event of default, interest on the outstanding principal shall accrue at a default interest rate of 22% per annum , or if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, certain events of default may trigger penalty and liquidated damage provisions. F- 37 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. None.