What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-02-10 compared with 2022-11-14 · 171 added, 122 removed, 201 unchanged (59% of the section changed)

2 unchanged sentences

following discussion and analysis of the results of operations and financial condition of Propanc Biopharma, Inc., and its wholly-owned

Australian subsidiary, Propanc PTY LTD (“Propanc” or the “Company”) As of September 30, 2022 for the three months

ended September 30, 2022 and 2021 should be read in conjunction with our unaudited financial statements and the notes to those unaudited

Australian subsidiary, Propanc PTY LTD (“Propanc” or the “Company”) as of December 31, 2022 and for the six months

ended December 31, 2022 and 2021 should be read in conjunction with our unaudited financial statements and the notes to those unaudited

financial statements that are included elsewhere in this Quarterly Report on Form 10-Q.

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On August 23, 2022, the initial

success of producing trypsinogen synthetically has now advanced to the stage where optimization of protein production is underway, whereas

success of producing trypsinogen synthetically has now advanced to the stage where optimization of protein production is underway;

purification and yield of chymotrypsinogen is currently the focus of research.

August 3, 2022, a Joint Research Collaboration Agreement was established with the Universities of Jaén and Granada, Spain.

late 2020, Mrs.

Belén Toledo Cutillas MSc, has been investigating an important experimental thesis on the effects of proenzyme

therapy and the tumor microenvironment, which is the key to the development, invasion, metastatic spread and recurrence of solid tumors.

The work is being conducted at the laboratory of Professor Macarena Perán PhD, who is the lead researcher on the project and is

the second Joint Research and Collaboration Agreement currently in progress with the two Spanish Universities.

On September 8, 2022,

proenzyme therapy was shown to have a favorable impact inhibiting, slowing, or reversing tumor development by acting as an anti-tumor

agent, decreasing tumor cell proliferation, developing a non-malignant phenotype (observable characteristics) and promoting cell adhesion

(sticking close to one another) and differentiation (cell specialization rather than stem cell like).

It was concluded that proenzyme

therapy could have a significant impact on the tumor microenvironment as a potential clinical application.

August 3, 2022, a Joint Research Collaboration Agreement was established with the University of Jaén and the University of Granada,

Since late 2020, Mrs.

Belén Toledo Cutillas MSc, has been investigating an important experimental thesis on the effects

of proenzyme therapy and the tumor microenvironment, which is the key to the development, invasion, metastatic spread and recurrence

of solid tumors.

The work is being conducted at the laboratory of Professor Macarena Perán PhD, who is the lead researcher on

the project and is the second Joint Research and Collaboration Agreement currently in progress with the two Spanish Universities.

September 8, 2022, proenzyme therapy was shown to have a favorable impact inhibiting, slowing, or reversing tumor development by acting

as an anti-tumor agent, decreasing tumor cell proliferation, developing a non-malignant phenotype (observable characteristics) and promoting

cell adhesion (sticking close to one another) and differentiation (cell specialization rather than stem cell like).

It was concluded

that proenzyme therapy could have a significant impact on the tumor microenvironment as a potential clinical application.

August 16, 2022, a Notice of Allowance has been received from the European Patent Office (EPO) for claims involving compositions of proenzymes

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product candidate, PRP.

November 9 and 10, 2022, Mr.

James Nathanielsz, Propanc’s Chief Executive Officer and Co-Founder, conducted investor meetings and

presented at the Sidoti & Company’s upcoming Micro-Cap Virtual Investor Conference.

The Sidoti & Company Micro-Cap Investor

Conference is a virtual event featuring micro-cap companies interacting with a number of institutional investors from across the United

December 17, 2022, on behalf of the University of Jaén and the University of Granada, and Propanc Biopharma, Mrs.

Toledo Cutillas MSc, Joint Researcher, presented at the recent 43 rd Meeting of the European Organization of Research and Treatment

of Cancer (EORTC), Pharmacology and Molecular Mechanisms (PAMM) group.

Toledo Cutillas discussed novel approaches to hampering tumor

support of key components within the tumor microenvironment.

Specifically, she described how “a protein-based treatment (PRP) re-educates”

certain tumor cells that play a key role in the tumor microenvironment, decreasing the tumor microenvironment influence on tumorigenesis

and increasing drug uptake of standard therapies that are often rendered ineffective due to chemoresistance.

of Operations

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The results discussed below are of the Company and its wholly-owned Australian subsidiary, Propanc

the Three months ended September 30, 2022, as compared to the Three months ended September 30, 2021.

the three months ended September 30, 2022 and 2021, we generated no revenue because we are currently undertaking research and development

activities for market approval and no sales were generated in this period.

the Three and Six months ended December 31, 2022, as compared to the Three and Six months ended December 31, 2021.

the three and six months ended December 31, 2022 and 2021, we generated no revenue because we are currently undertaking research and

development activities for market approval and no sales were generated in this period.

Administration

expense increased to $465,132 for the three months ended September 30, 2022 as compared to $431,740 for the three months ended September

expense increased to $525,620 for the three months ended December 31, 2022 as compared to $346,164 for the three months ended

December 31, 2021.

This increase of approximately $179,000 is primarily attributable to an increase of approximately $145,000 in

employee remuneration expense, increase in stock-based expenses of approximately $31,000, increase in accounting fees of

approximately $5,000 offset by a decrease in general consulting, legal and investor relation fees of approximately

Administration

expense increased to $990,752 for the six months ended December 31, 2022 as compared to $777,904 for the six months ended December 31,

This increase of approximately $213,000 is primarily attributable to an increase of approximately $151,000 in general consulting,

legal and investor relation fees, increase in accounting fees of approximately $9,000, increase of approximately $164,000 in employee

remuneration expense and increase in other general and administrative expenses of approximately $3,000, offset by decrease in stock-based

expenses of approximately $151,000.

expenses decreased to $6,373 for the three months ended September 30, 2022 as compared to $7,736 for the three months ended September

This decrease of approximately $1,400 is primarily attributable to exchange rate movements over the period when compared to

the same period in 2021.

remuneration expense, increase in marketing expenses of $7,000, offset by decrease in stock-based expenses of approximately $116,000

and decrease in other general and administrative expenses of approximately $2,000.

expenses increased to $7,506 for the three months ended December 31, 2022 as compared to $6,550 for the three months ended December 31,

This increase of $956 is primarily attributable to exchange rate movements over the period when compared to the same period in

expenses decreased to $13,879 for the six months ended December 31, 2022 as compared to $14,286 for the six months ended December 31,

This decrease of $407 is primarily attributable to exchange rate movements over the period when compared to the same period in

and Development Expenses

and development expenses were increased to $101,325 for the three months ended September 30, 2022 as compared to $46,554 for the three

months ended September 30, 2021.

The increase in research and development expenses is primarily attributable to the two-year collaboration

agreement with University Jaén which was executed in October 2020 to provide certain research services to the Company.

Additionally,

on July 27, 2022, the Company entered into another two-year research agreement with the University of Jaén to provide certain

research and experiment services to the Company.

expense increased to $162,752 for the three months ended September 30, 2022, as compared to $109,853 for the three months ended September

and development expenses were increased to $74,878 for the three months ended December 31, 2022 as compared to $50,753 for the three

months ended December 31, 2021.

Research and development expenses were increased to $176,203 for the six months ended December 31, 2022

as compared to $97,307 for the six months ended December 31, 2021.

The increase in research and development expenses is primarily attributable

to the two-year collaboration agreement with University of Jaén which was executed in October 2020 to provide certain research

services to the Company.

Additionally, on July 27, 2022, the Company entered into another two-year research agreement with the University

of Jaén to provide certain research and experiment services to the Company.

expense decreased to $98,619 for the three months ended December 31, 2022, as compared to $177,905 for the three months ended December

Interest expense is primarily comprised of approximately $81,000 of debt discount amortization and accretion of put premium

and interest expense from accrual of interest expense and other financing fees for a total of approximately $15,000 for the for the three

months ended September 30, 2022.

increase in interest expense of $52,899 is primarily attributable to the increase of approximately $26,000 in accretion of put

premium and increase in amortization of debt discount of approximately $25,000.

and interest expense from accrual of interest expense and other financing fees for a total of approximately $18,000 for the three months

ended December 31, 2022.

This decrease in interest expense of $79,286 is primarily attributable to the decrease of approximately $126,000

in accretion of put premium offset by increase in amortization of debt discount of approximately $47,000.

expense decreased to $261,371 for the six months ended December 31, 2022, as compared to $287,758 for the six months ended December 31,

Interest expense is primarily comprised of approximately $229,000 of debt discount amortization and accretion of put premium and

interest expense from accrual of interest expense and other financing fees for a total of approximately $32,000 for the six months ended

December 31, 2022.

This decrease in interest expense of $26,387 is primarily attributable to the decrease of approximately $99,000 in

accretion of put premium offset by increase in amortization of debt discount of approximately $73,000.

in Fair Value of Derivative Liabilities

in fair value of derivative liabilities were increased to a gain of $65,173 for the three months ended September 30, 2022 as

compared to a loss of $3,904 for the three months ended September 30, 2021.

This increase in gain of approximately $69,000 is

primarily attributable to a decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion

option derivatives as a result of the decrease in stock prices during the three months ended September 30, 2022.

in fair value of derivative liabilities were increased to a gain of $62,335 for the three months ended December 31, 2022 as compared

to a loss of $163,853 for the three months ended December 31, 2021.

Change in fair value of derivative liabilities were increased to

a gain of $127,508 for the six months ended December 31, 2022 as compared to a loss of $167,757 for the six months ended December 31,

This increase in gain during the three and six months ended December 31, 2022 of approximately $226,000 and $295,000, respectively,

is primarily attributable to a decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion

option derivatives as a result of the decrease in stock prices during the six months ended December 31, 2022.

from Settlement of accounts payable

from settlement of accounts payable was $17,499 for the three months ended September 30, 2022 as compared to $0 for the three months ended September

On August 16, 2022, the Company and a third-party investor relations consultant agreed to settle an outstanding payable of

$23,050 in exchange for 2,305,000 warrants to purchase the Company’s common stock at $0.01 per share with an expiry date of August

16, 2025 and fair market value of $5,551.

Accordingly, the Company recognized gain from settlement of accounts payable of $17,499 during the three

months ended September 30, 2022.

Loss on Extinguishment of Debt, net

the three months ended September 30, 2022, notes with principal amounts totaling $79,000 and accrued interest of $9,543 contained

bifurcated embedded conversion option derivatives.

Accordingly, the fair market value of the shares issued was $195,952, resulting

in a loss on extinguishment at the time of conversion of $107,409 and $106,799 of derivative fair value liability was recorded as a

gain on extinguishment at the time of conversion, resulting in a net loss of $610.

Currency Transaction Gain

currency transaction gain decreased to a gain of $36,223 for the three months ended September 30, 2022 as compared to a gain of

$109,129 for the three months ended September 30, 2021.

This decrease of approximately $73,000 is partially attributable to the

decrease in exchange rates during the three months ended September 30, 2022.

loss increased to $617,295 for the three months ended September 30, 2022 as compared to a net loss of $490,658 for the three months ended

September 30, 2021.

from settlement of accounts payable was $17,499 for the six months ended December 31, 2022, as compared to $0 for the six months ended

December 31, 2021.

On August 16, 2022, the Company and a third-party investor relations consultant agreed to settle an outstanding payable

of $23,050 in exchange for 2,305,000 warrants to purchase the Company’s common stock at $0.01 per share with an expiry date of

August 16, 2025 and fair market value of $5,551.

Accordingly, the Company recognized gain from settlement of accounts payable of $17,499

during the six months ended December 31, 2022.

on Extinguishment of Debt, net

the six months ended December 31, 2022, notes with principal amounts totaling $79,000 and accrued interest of $9,543 contained bifurcated

embedded conversion option derivatives.

Accordingly, the fair market value of the shares issued was $195,952, resulting in a loss on

extinguishment at the time of conversion of $107,409 and $106,799 of derivative fair value liability was recorded as a gain on extinguishment

at the time of conversion, resulting in a net loss of $610.

Additionally,

during the six months ended December 31, 2022, the Company recognized the remaining put premium of $43,520 related to a convertible note

into gain on extinguishment of debt during the six months ended December 31, 2022.

The lender of such convertible note agreed to surrender

all conversion rights in its currently held convertible notes due to violation of Section 15(a)(1) of the Securities Exchange Act of

Currency Transaction Gain (Loss)

currency transaction gain decreased to a loss of $13,988 for the three months ended December 31, 2022, as compared to a loss of $110,215

for the three months ended December 31, 2021.

Foreign currency transaction gain increased to a gain of $22,235 for the six months ended

December 31, 2022 as compared to a loss of $1,086 for the six months ended December 31, 2021.

The increase of approximately $96,000 and

$23,000 is partially attributable to the increase in exchange rates during the three and six months ended December 31, 2022.

loss decreased to $485,418 for the three months ended December 31, 2022, as compared to a net loss of $799,977 for the three months ended

December 31, 2021.

Net loss decreased to $1,102,713 for the six months ended December 31, 2022 as compared to a net loss of $1,290,635

for the six months ended December 31, 2021.

The change relates to the factors discussed above.

Company recognized the value of the effect of a down round feature related to our Series A warrants when triggered.

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 $389,235 and $114,844 during the three months ended

September 30, 2022 and 2021, respectively, and a corresponding reduction of income available to common stockholders upon the

alternate cashless exercise of these warrants during the three months ended September 30, 2022 and 2021, respectively.

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 dividends of $19,322 and $93,398 during the three months ended December 31, 2022 and 2021,

respectively, and a corresponding reduction of income available to common stockholders upon the alternate cashless exercise of these

warrants during the three months ended December 31, 2022 and 2021, respectively.

The Company recognized deemed dividend of $408,557 and

$208,242 during the six months ended December 31, 2022 and 2021, respectively, and a corresponding reduction of income available to common

stockholders upon the alternate cashless exercise of these warrants during the six months ended December 31, 2022 and 2021, respectively.

loss available to common stockholders

loss available to common stockholders increased to $1,006,530 for the three months ended September 30, 2022 as compared to a net loss

available to common stockholders of $605,502 for the three months ended September 30, 2021.

This increase of approximately $401,000 is

primarily attributable to the change relates to the factors discussed above.

loss available to common stockholders decreased to $504,740 for the three months ended December 31, 2022 as compared to a net loss available

to common stockholders of $893,375 for the three months ended December 31, 2021.

Net loss available to common stockholders increased

to $1,511,270 for the six months ended December 31, 2022 as compared to a net loss available to common stockholders of $1,498,877 for

the six months ended December 31, 2021.

decrease and increase during the three- and six-months period are primarily attributable to the change relates to the factors discussed

and Capital Resources

Financial Condition

of September 30, 2022, we had total assets of $94,254, comprised primarily of cash of $19,396, GST tax receivable of $2,701, prepaid

of December 31, 2022, we had total assets of $108,022, comprised primarily of cash of $24,476, GST tax receivable of $4,543, prepaid

expenses and other current assets of $25,207, security deposit of $2,042, operating lease ROU asset, net of $50,671, and property and

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asset, net of $62,523, and security deposit of $2,075.

had current liabilities of $2,822,426, primarily comprised of net convertible debt of $913,641, accounts payable and accrued expenses

of $1,347,944, employee benefit liability of $397,171, and embedded conversion option liabilities of $72,958 as of September 30, 2022.

As compared to June 30, 2022, we had current liabilities of $3,062,981, primarily comprised of net convertible debt of $984,260, accounts

payable and accrued expenses of $1,409,138, employee benefit liability of $415,799, and embedded conversion option liabilities of $151,262.

have funded our operations primarily through the issuance of equity and/or convertible securities for cash.

had current liabilities of $2,992,554, primarily comprised of net convertible debt of $633,740, note payable, net of $72,404, loan payable

of $65,280, accrued interest of $59,733, accounts payable and accrued expenses of $1,470,605, employee benefit liability of $578,453,

and embedded conversion option liabilities of $10,623 as of December 31, 2022.

As compared to June 30, 2022, we had current liabilities

of $3,062,981, primarily comprised of net convertible debt of $926,438, accrued interest of $57,822, accounts payable and accrued expenses

of $1,409,138, employee benefit liability of $415,799, and embedded conversion option liabilities of $151,262.

have funded our operations primarily through the issuance of equity and/or convertible debt securities for cash.

The cash was used primarily

for payments for research and development, administration expenses, occupancy expenses, professional fees, consultants and travel.

the three months ended September 30, 2022 we received proceeds from exercise of warrants of $100,000, proceeds from issuance of convertible

notes of $345,750, proceeds from sale of our stocks of $24,711 and proceeds from collection of subscription receivable of $23,758.

the six months ended December 31, 2022 we received proceeds from exercise of warrants of $200,000, proceeds from issuance of convertible

notes and note payable of $495,750, proceeds from sale of shares of our Common Stock of $24,711 and proceeds from collection of subscription

receivables of $23,758.

have substantial capital resource requirements and have incurred significant losses since inception.

As of September 30, 2022, we had

As of December 31, 2022, we had

$24,476 in cash.

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and Uses of Cash

For the Three months ended

September 30,

Net cash used in operating activities

Net cash provided by financing activities

Effect of exchange rate changes on cash

the Six months ended

cash used in operating activities

cash provided by financing activities

of exchange rate changes on cash

Cash Flow from Operating Activities

cash used in operating activities was $509,315 for the three months ended September 30, 2022, due to our net loss of $617,295 offset

cash used in operating activities was $734,542 for the six months ended December 31, 2022, due to our net loss of $1,102,713, offset

primarily by non-cash charges of amortization of debt discount of $83,903, stock-based compensation of $59,219, accretion of put premium

of $115,769, change in fair value of derivatives of $65,173 and issuance and gain from settlement of debt of $17,499.

Net changes in

operating assets and liabilities totaled $71,209, which is primarily attributable to increase in employee benefit liability of $10,415,

increase accrued interest of $13,430, increase in accrued expenses and other payables of $15,162, and increase in accounts payable of

cash used in operating activities was $486,758 for the three months ended September 30, 2021, due to our net loss of $490,658 offset

primarily by non-cash charges of amortization of debt discount of $6,074, stock-based compensation of $154,140 non-cash interest expense

of $2,250, accretion of put premium of $90,192, change in fair value of derivatives of $3,904 addback foreign currency transaction gain

Net changes in operating assets and liabilities totaled $144,040, which is primarily attributable to increase in prepaid

expense of $8,353, increase accrued interest of $11,338 offset by decrease in accounts payable of $137,927 and decrease in accrued expenses

of $144,711, change in fair value of derivatives of $127,508, gain on extinguishment of debt of $42,910 and gain from settlement of accounts

payable of $17,499.

Net changes in operating assets and liabilities totaled $278,737, which are primarily attributable to increase in

prepaid expenses and other assets $16,724, employee benefit liability of $169,268, increase accrued interest of $31,433, increase in

accrued expenses and other payables of $97,414, and increase in accounts payable of $9,520.

cash used in operating activities was $711,093 for the six months ended December 31, 2021, due to our net loss of $1,290,635, offset

primarily by non-cash charges of amortization of debt discount of $11,295, stock-based compensation of $41,436, accretion of put premium

of $245,000, change in fair value of derivatives of $167,757 and issuance and amortization of common stock for services of $133,422.

Net changes in operating assets and liabilities totaled ($23,717), which is primarily attributable to increase in employee benefit liability

of $12,882, increase accrued interest of $28,264 offset by decrease in accounts payable of $51,037 and decrease in accrued expenses of

Cash Flow from Financing Activities

cash provided by financing activities for the three months ended September 30, 2022 were $494,219 as compared to $435,000 for the three

months ended September 30, 2021.

During the three months ended September 30, 2022 we received proceeds from the exercise of warrants

of $100,000, proceeds from sale of common stock of $24,711, collections of subscription receivable of $23,758, and net proceeds from

issuance of convertible notes of $345,750.

During the three months ended September 30, 2021 we received proceeds from the exercise of

warrants of $275,000 and net proceeds from issuance of convertible notes of $160,000.

cash provided by financing activities for the six months ended December 31, 2022 were $744,219, as compared to $789,500 for the six months

ended December 31, 2021.

During the six months ended December 31, 2022, we received proceeds from the exercise of warrants of $200,000,

proceeds from sale of shares of our Common Stock of $24,711, collections of subscription receivable of $23,758, and net proceeds from

issuance of convertible notes and a note payable of $495,750.

cash provided by financing activities for the six months ended December 31, 2021 were $789,500 as compared to $358,044 for the six months

ended December 31, 2020.

During the six months ended December 31, 2021, we received proceeds from the exercise of warrants of $375,000

and net proceeds from issuance of convertible notes of $414,500.

of Exchange Rate

effect of the exchange rate on cash resulted in a $30,425 positive adjustment to cash flows in the three months ended September 30, 2022

as compared to an adjustment of $95,320 positive adjustment to cash flows in the three months ended September 30, 2021.

The reason for

the fluctuation is due to the application of currency translation rates throughout the cash flow statement, the volume of transactions

within each period and the daily fluctuation in exchange rates.

effect of the exchange rate on cash resulted in a $10,732 positive adjustment to cash flows in the six months ended December 31, 2022,

as compared to a $7,046 negative adjustment to cash flows in the six months ended December 31, 2021.

The reason for the fluctuation is

due to the application of currency translation rates throughout the cash flow statement, the volume of transactions within each period

and the daily fluctuation in exchange rates.

Accounting Estimates

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for Income Taxes:

We are governed by Australian and United States income tax laws, which are administered by the Australian Taxation

Office and the United States Internal Revenue Service, respectively.

We follow ASC 740, “ 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.

We are governed by Australian income tax laws and United States income tax laws, which are administered by the

Australian Taxation Office and the United States Internal Revenue Service, respectively.

We follow ASC 740, “ Accounting for

Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes.

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.

Company adopted provisions of ASC 740, Sections 25 through 60, “ Accounting for Uncertainty in Income Taxes .” These

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Concern Qualification

did not generate any revenue for the three months ended September 30, 2022 and 2021 and have incurred significant losses and cash used

in operations, and such losses and use of cash are expected to continue.

did not generate any revenue for the six months ended December 31, 2022 and 2021 and have incurred significant losses and cash used in

operations, and such losses and use of cash are expected to continue.

Our independent registered public accounting firm has included

a “Going Concern Qualification” in their audit report for each of the fiscal years ended June 30, 2022 and 2021.

a “Going Concern Qualification” in its audit report for each of the fiscal years ended June 30, 2022 and 2021.

we have negative working capital and convertible debt that is past maturity that we are currently negotiating with lenders in order to

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis