Propanc Biopharma, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Special Note Regarding Forward-Looking Information The 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 (collectively, “Propanc” or the “Company”) as of March 31, 2026 and for the three and nine months ended March 31, 2026 and 2025 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 for the period ended March 31, 2026 (this “Quarterly Report”). References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “us”, “we”, “our” and similar terms refer to Propanc. This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “feel”, “forecast”, “intend”, “may,”, “outlook”, “plan”, “potential”, “predict”, “project,”, “seek”, “should”, “will”, “would” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise. U.S. Dollars are denoted herein by “USD,” “$” and “dollars”. Overview The Company was originally formed in Melbourne, Victoria, Australia on October 15, 2007, as Propanc PTY LTD. On November 23, 2010, Propanc Health Group Corporation was incorporated in the State of Delaware and in January 2011; to reorganize our Company, we acquired all the outstanding shares of Propanc PTY LTD on a one-for-one basis, whereby Propanc PTY LTD became our wholly owned subsidiary. Effective April 20, 2017, we changed our name to “Propanc Biopharma, Inc.” to better reflect our current stage of operations and development. We are a development-stage healthcare company that is currently focused on developing new cancer treatments for patients suffering from pancreatic, ovarian and colorectal cancer. Utilizing our scientific and oncology consultants, we have developed a rational, composite formulation of anti-cancer compounds, which together exert several effects designed to control or prevent tumors from recurring and spreading through the body. Our lead product candidate, PRP, is a variation upon our novel formulation and involves pro-enzymes, the inactive precursors of enzymes. Recent Developments On January 20, 2026, a new provisional patent application was filed for methods of producing trypinsogen and chymotrypsinogen with IP Australia. The patent application describes an optimized expression system to produce a world-first fully synthetic recombinant version of PRP, a long-term therapy for the treatment and prevention of metastatic cancer from solid tumors. A fully synthetic version of trypsinogen and chymotrypsinogen, called Rec-PRP, could have additional benefits to a global healthcare system that further capitalizes on a new therapeutic approach to treating cancer. For example, both proenzymes are synthesized by an in vivo (living organism) expression system, such as yeast cells, to produce proteins that could be maintained for long periods of time without suffering degradation in the absence of refrigeration. This is useful for a longer shelf-life as well as global distribution, particularly in warmer climates and developing regions where refrigeration is not available. Further, the program could produce large quantities of trypsinogen and chymotrypsinogen for commercial use that exhibits minimal variation between lots and without sourcing from animals. Therefore, management believes a fully synthetic recombinant version of PRP would have tremendous implications from a regulatory perspective, but also a practical, commercial benefit for global distribution. On January 27, 2026, the Company filed a new provisional patent application focusing on innovative formulations of the pancreatic proenzymes, trypsinogen and chymotrypsinogen— the active components in our lead asset, PRP — addressing critical challenges in stability, storage, freeze/thaw cycling, and global transport. These advancements overcome longstanding barriers in developing viable pharmaceutical compositions of these proenzymes for biomedical applications, including cancer and other chronic diseases. On March 10, 2026, the Company executed a service agreement with FyoniBio GmbH (formerly Glycotope, est. 2010), a German Contract Development Organization (CDO) based in Berlin for establishing and validating a liquid chromatography-mass spectrometry (LC-MS) based pharmacokinetics (PK) assay. The objective is to quantify the Company’s lead asset, PRP, consisting of two proenzymes trypsinogen and chymotrypsinogen, as well as their activated enzyme forms trypsin and chymotrypsin from human serum during the Phase 1b, First-In-Human (FIH) study in advanced cancer patients suffering from solid tumors. The purpose and design of the study will be used as an important tool to measure the concentration of PRP and its analytes over time upon administration to advanced cancer patients suffering from solid tumors. Results from the PK assay will evaluate the systemic concentration of PRP sufficient to expect anti-tumor activity in patients whilst carefully evaluating their response according to safety and tolerability parameters. Secondary efficacy endpoints will also be observed to support duration of treatment for responders. The LC-MS PK assay should offer a robust method to quantify all four analytes in patients’ serum with a maximum sensitivity of at least 0.1µg/mL, sufficient to monitor the concentration of PRP in patients during the FIH study. 3 On March 24, 2026, a multi-year Joint Research Collaboration Agreement was established with the Universities of Jaén (UJA) and Granada (UGR), Spain. The collaboration involves the evaluation of a senescence-modulating (i.e., anti-aging) compound to mitigate senescence and to complete experiments to further support the claims of recently filed fibrosis and cancer related patent applications, requested by Propanc Biopharma Inc. to the research group “Biological Technologies of The University of Jaén” and UGR’s Research Group, “Advanced Therapies: Differentiation, Regeneration and Cancer.” Prof. Macarena Perán Quesada, University of Jaén, will oversee management and coordination functions of the working team and will be the scientist in charge of the project appointed by the university. Two Postdoctoral Fellows of the UJA, Dr Maria Belén Toledo and Dr Aitor González-Titos will conduct the study, including in vitro and in vivo experiments, data analysis, and manuscript preparation. Prof. Juan Antonio Marchal Corrales, head of the Laboratory in Bio-fabrication and 3D-bioprinting of the University of Granada will oversee management of equipment and facilities necessary to perform in vitro and in vivo experiments and will be the scientist in charge of the experimental designs and project by the university. Results of Operations The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto included elsewhere in this Report. The results discussed below are of the Company and its wholly-owned Australian subsidiary, Propanc PTY LTD. For the Three and Nine months ended March 31, 2026, as compared to the Three and Nine months ended March 31, 2025. Revenue For the three and nine months ended March 31, 2026 and 2025, 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 Administration expense decreased to $6,219,644 for the three months ended March 31, 2026 as compared to $53,068,147 for the three months ended March 31, 2025. This decrease of approximately $46,849,000 is primarily attributable to the decrease in stock-based compensation to employees and stock-based consulting expenses to various consultants of approximately $47,487,000, general consulting, legal, director fees and investor relation fees of approximately $298,000, increase in accounting fees of approximately $7,000, increase of approximately $32,000 in employee remuneration expense, and increase in other general and administrative expenses of approximately $301,000 related to increase public company expenses. Administration expense decreased to $14,446,391 for the nine months ended March 31, 2026 as compared to $53,442,499 for the nine months ended March 31, 2025. This decrease of approximately $38,996,000 is primarily attributable to the decrease in stock-based compensation to employees and stock-based consulting expenses to various consultants of approximately $41,272,000, general consulting, legal, director fees and investor relation fees of approximately $1,650,000, increase in accounting fees of approximately $55,000, increase of approximately $120,000 in employee remuneration expense, and increase in other general and administrative expenses of approximately $419,000 related to increase public company expenses and increase in marketing expense of approximately $32,000. Occupancy Expense – Relates Party Occupancy expenses increased to $10,917 for the three months ended March 31, 2026 as compared to $6,469 for the three months ended March 31, 2025. Occupancy expenses increased to $32,306 for the nine months ended March 31, 2026 as compared to $20,187 for the nine months ended March 31, 2025. This increase in both periods are primarily attributable to the increase of monthly rental fees as a result of the lease renewal with the related party lessor in May 2025. Research and Development Expenses Research and development expenses increased to $169,660 for the three months ended March 31, 2026 as compared to $54,097 for the three months ended March 31, 2025, an increase in research and development expenses of approximately $116,000. Research and development expenses increased to $249,822 for the nine months ended March 31, 2026 as compared to $170,199 for the nine months ended March 31, 2025, an increase in research and development expenses of approximately $80,000. Such research and development expenses are related to the advancement of the Company’s lead asset, PRP, along with the development of pathway into clinical development stage. This includes preparation of PRP for a Phase 1b First-In-Human study in 30 - 40 advanced cancer patients suffering from solid tumors. Preparatory activities include the identification and selection of a GMP manufacturer to produce the finished drug product for the upcoming study, initiation of method development and validation of a pharmacokinetics method to analyze PRP in human serum and finalization of the clinical trial synopsis as well as future forecast compound demand required for GMP manufacture for the Phase 1B study. The Company also initiated a further two-year extension of the POP1 research program for the evaluation of a senescence-modulating (i.e., anti-aging) compound using proenzyme technology to mitigate senescence and to complete experiments to further support the claims of recently filed fibrosis and cancer-related patent applications. 4 Interest Expense Interest expense decreased to $38,270 for the three months ended March 31, 2026, as compared to $104,042 for the three months ended March 31, 2025. Interest expense increased to $402,874 for the nine months ended March 31, 2026, as compared to $309,215 for the nine months ended March 31, 2025. Interest expense is primarily comprised of approximately $187,000 of debt discount amortization, accretion of put premium of approximately $37,000, default and prepayment penalty fees of approximately $53,000 and interest expense from accrual of interest expense and other financing fees for a total of approximately $87,000 for the for the nine months ended March 31, 2026. This decrease in interest expense during the three months ended March 31, 2026 of approximately $66,000 is primarily attributable to the decrease in amortization of debt discount of approximately $48,000, and decrease of approximately $18,000 in interest expense from accrual of interest expense and other financing fee. This increase in interest expense during the nine months ended March 31, 2026 of approximately $94,000 is primarily attributable to the increase in amortization of debt discount of approximately $5,000, increase in accretion of put premium of approximately $37,000, increase in default and prepayment penalty fees of approximately $53,000. Derivative Expense Derivative expense decreased to $0 for the three months ended March 31, 2026 as compared to $59,271 for the three months ended March 31, 2025. Derivative expense decreased to $0 for the nine months ended March 31, 2026 as compared to $95,012 for the nine months ended March 31, 2025. This decrease is primarily attributable to the decrease in issuance of convertible notes which initial value was bifurcated from the embedded conversion option and was recorded as derivative expense. Change in Fair Value of Derivative Liabilities Change in fair value of derivative liabilities increased to a loss of $18,146 for the three months ended March 31, 2026 as compared to a gain of $47,119 for the three months ended March 31, 2025. Change in fair value of derivative liabilities was decreased to a gain of $49,876 for the nine months ended March 31, 2026 as compared to $113,487 for the nine months ended March 31, 2025. The change for the three and nine months period of approximately $65,000 and $64,000, respectively, is primarily attributable to the decrease in fair value of the principal amount of convertible notes with bifurcated embedded conversion option derivatives as a result of the decrease in number of convertible notes which value was bifurcated from the embedded conversion option during the nine months ended March 31, 2026 as compared to the prior nine month period. Change in Fair Value of Warrant Liability Change in fair value of warrant liability increased to a gain of $182,517 and $776,227 for the three and nine months ended March 31, 2026, respectively, as compared to $0 for both prior periods. The increase in gain for both periods are primarily attributable to the decrease in fair value of the warrant liability as a result of the decrease in our stock price during the nine months ended March 31, 2026. Gain (Loss) on Extinguishment of Debt, net During the nine months ended March 31, 2026, were principal aggregate amount of convertible notes of $145,650, accrued interest of $14,960 and conversion fees of $2,343 containing bifurcated embedded conversion option derivatives were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $293,968, resulting in a loss on extinguishment at the time of conversion of $131,015 and $303,743 of derivative liability fair value was recorded as a gain on extinguishment at the time of conversion, resulting in a net gain of $172,728 which is included in gain (loss) on extinguishment of debt in the accompanying condensed consolidated statements of operations. Additionally, on January 7, 2026, the Company entered into an Exchange Agreement with Crown Bridge and issued 394,788 shares of common stock valued at approximately $0.51 per share or $200,000 in exchange for the total outstanding loan balance of $65,280 and accrued interest of $60,484, resulting in a loss on extinguishment of debt at the time of exchange of $74,236. During the nine months ended March 31, 2025, convertible notes containing bifurcated embedded conversion option derivatives with principal aggregate amount of $54,850, accrued interest of $4,365 and conversion fees of $3,770 were converted into common stock. Accordingly, the fair market value of the shares issued upon conversion was $154,154, resulting in a loss on extinguishment at the time of conversion of $91,169 and $73,640 of derivative liability fair value and was recorded as a gain on extinguishment at the time of conversion, resulting in a net loss of $17,529 which is included in gain (loss) on extinguishment of debt in the accompanying condensed consolidated statements of operations. Additionally, Between January 5, 2025 and March 5, 2025, the Company issued an aggregate of 51,000 shares of common stock to certain vendors in exchange for payment of outstanding balance of accounts payable of $129,354 pursuant to debt exchange agreements. Accordingly, the fair market value of the shares issued was $437,500, resulting in a loss on extinguishment of debt at the time of exchange of $308,146 during the nine months ended March 31, 2025. On January 23, 2025, the Company entered into a debt exchange agreement with the former director and issued 30,000 shares of common stock in exchange for the total outstanding loan of $74,395. Accordingly, the fair market value of the shares issued was $375,000, resulting in a loss on extinguishment of debt at the time of exchange of $300,605 during the nine months ended March 31, 2025. On February 5, 2025, the Company entered into debt exchange agreements with the two investors and issued an aggregate of 30,000 shares of common stock in exchange for the total outstanding loan including accrued interest of $86,248. Accordingly, the fair market value of the shares issued was $300,000, resulting in a loss on extinguishment of debt at the time of exchange of $213,752 during the nine months ended March 31, 2025. Foreign Currency Transaction Gain (Loss) Foreign currency transaction gain (loss) increased to a gain of $35,006 for the three months ended March 31, 2026 as compared to $(12,486) for the three months ended March 31, 2025. Foreign currency transaction gain (loss) decreased to a loss of $19,190 for the nine months ended March 31, 2026 as compared to $88,184 for the nine months ended March 31, 2025. The overall decrease is partially attributable to the increase in exchange rates during the nine months ended March 31, 2026. 5 Net loss Net loss decreased to $6,360,336 for the three months ended March 31, 2026 as compared to a net loss of $54,067,346 for the three months ended March 31, 2025. Net loss decreased to $14,289,468 for the nine months ended March 31, 2026 as compared to a net loss of $54,851,839 for the nine months ended March 31, 2025. The change relates to the factors discussed above. Deemed dividend The Company paid legal fees related to the sale of our Series C preferred stock of $50,000 and accreted $882,246 up to the redemption value of the Series C Preferred stock. Accordingly, the Company recognized total deemed dividend of $932,246 and $0 during the nine months ended March 31, 2026 and 2025, respectively, and a corresponding reduction of income available to common stockholders during the nine months ended March 31, 2026 and 2025. Net loss available to common stockholders Net loss available to common stockholders decreased to $6,360,336 for the three months ended March 31, 2026 as compared to a net loss available to common stockholders of $54,067,346 for the three months ended March 31, 2025. Net loss available to common stockholders decreased to $15,221,714 for the nine months ended March 31, 2026 as compared to a net loss available to common stockholders of $54,851,839 for the nine months ended March 31, 2025. The change relates to the factors discussed above. Liquidity and Capital Resources Current Financial Condition As of March 31, 2026, we had total assets of $14,333,780, comprised primarily of cash of $443,702, GST tax receivable of $11,057, prepaid expenses – current portion of $7,733,625, other current assets of $35,104, security deposit of $2,065, operating lease ROU asset, net of $46,584, prepaid expenses – long-term of $6,057,422 and fixed assets of $4,221. As compared to June 30, 2025, we had total assets of $19,631,808, comprised primarily of cash of $12,088, GST tax receivable of $5,302, prepaid expenses – current portion of $8,334,046, other current assets of $1,380, security deposit of $1,971, deferred offering cost of $291,773, operating lease ROU asset, net of $59,413 and prepaid expenses – long-term of $10,925,835. We had current liabilities of $3,475,628, primarily comprised of net convertible debt of $55,000, accounts payable, accrued expenses and accrued interest of $2,039,249, employee benefit liability of $738,187, loans payable – related party of $465,282, embedded conversion option liabilities of $50,273, warrant liability of $104,313 and operating lease liability of $23,324 as of March 31, 2026. As compared to June 30, 2025, $5,578,240, primarily comprised of net convertible debt of $537,921, accounts payable, accrued expenses and accrued interest of $2,926,941, employee benefit liability of $667,901, loans payable of $65,280, loans payable – related party of $415,329, note payable, net of $543,312, embedded conversion option liabilities of $403,892 and operating lease liability of $17,664. We have funded our operations primarily through the issuance of equity and/or convertible securities for cash. The cash was used primarily for repayment of debt and payments for research and development, administration expenses, occupancy expenses, professional and consulting fees, and travel. During the nine months ended March 31, 2026 we received proceeds from the sale of our common stock for approximately $3.3 million, sale of our Series C preferred stock for approximately $950,000, proceeds from exercise of Series C warrants of $1,000,000 and proceeds from issuance of notes of $175,000 and proceeds from issuance of loan payable from related parties of $78,249. We have substantial capital resource requirements and have incurred significant losses since inception. As of March 31, 2026, we had $443,702 in cash. We depend upon debt and/or equity financing to fund our ongoing operations and to execute our current business plan. Such capital requirements are in excess of what we have in available cash and for which we currently have commitments. Therefore, we presently do not have enough available cash to meet our obligations over the next 12 months. If continued funding and capital resources are unavailable at reasonable terms, we may curtail our plan of operations. We will be required to obtain alternative or additional financing from financial institutions, investors or otherwise, in order to maintain and expand our existing operations. The failure by us to obtain such financing would have a material adverse effect upon our business, financial condition and results of operations, and adversely affecting our ability to complete ongoing activities in connection with our research and development programs. Sources and Uses of Cash For the Nine months ended March 31, 2026 2025 Net cash used in operating activities $ (4,080,653 ) $ (312,982 ) Net cash used in investing activities $ (4,912 ) $ - Net cash provided by financing activities $ 4,473,485 $ 418,000 Effect of exchange rate changes on cash $ 43,694 $ (75,343 ) 6 Net Cash Flow from Operating Activities Net cash used in operating activities was $4,080,653 for the nine months ended March 31, 2026, due to our net loss of $14,289,468 offset primarily non-cash charges of amortization of debt discount of $198,362, accretion of put premium of $37,450, non-cash interest expense of $5,843, total stock-based expenses of $11,581,251, and foreign currency transaction loss of $19,190, addback gain from extinguishment of debt of $135,943 and change in fair value of derivatives of $49,876 and warrant liability of $776,227. Net changes in operating assets and liabilities totaled $687,555, which is primarily attributable to an increase in prepaid expenses of $68,669, decrease in accounts payable of $335,235, and decrease in accrued expenses and other payables of $308,783. Net cash used in operating activities was $312,982 for the nine months ended March 31, 2025, due to our net loss of $54,851,839 offset primarily by non-cash charges of amortization of debt discount of $193,283, non-cash interest expense of $5,519, total stock-based expenses of $52,853,115, derivative expense of $95,012, foreign currency transaction loss of $88,184, and loss from extinguishment of debt of $840,032 addback change in fair value of derivatives of $113,487. Net changes in operating assets and liabilities totaled $562,247, which is primarily attributable to an increase in accrued interest of $89,179, increase in accounts payable of $118,706 and increase in accrued expenses and other payables of $342. Net Cash Flow from Investing Activities Net cash used in investing activities was $4,912 for the nine months ended March 31, 2026, related to purchase of equipment, as compared to $0 for the nine months ended March 31, 2025. Net Cash Flow from Financing Activities Net cash provided by financing activities for the nine months ended March 31, 2026 was $4,473,485. During the nine months ended March 31, 2026 we received net proceeds from sales of our common stock for $3,314,458 and Series C preferred stock for $950,099, proceeds from exercise of Series C warrants of $1,000,000, proceeds from issuance of notes of $175,000 and proceeds from issuance of loan from related parties of $78,249 offset by repayment of notes of $875,127 and loans payable – related party of $169,194. Net cash provided by financing activities for the nine months ended March 31, 2025 was $418,000. During the nine months ended March 31, 2025 we received net proceeds from issuance of convertible notes of $150,000, proceeds from a note of $145,000 and proceeds from issuance of loan from related parties of $294,400 offset by repayment of notes of $98,400, convertible note of $8,000 and deferred offering cost of $65,000. Effect of Exchange Rate The effect of the exchange rate on cash resulted in a $43,694 positive adjustment to cash flows in the nine months ended March 31, 2026 as compared to a $75,343 negative adjustment to cash flows in the nine months ended March 31, 2025. 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. Critical Accounting Estimates Below is a discussion of our more subjective accounting estimation processes for purposes of explaining (i) the methodology used in calculating the estimates, (ii) the inherent uncertainties pertaining to such estimates, and (iii) the possible effects of a significant variance in actual experience, from that of the estimate, on our financial condition. Estimates involve numerous assumptions that, if incorrect, could create a material adverse impact on the Company’s results of operations and financial condition. Reference is frequently made herein to the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”). This is the source of authoritative US GAAP recognized by the FASB to be applied to non-governmental entities. Each ASC reference in this filing is presented with a three-digit number, which represents its Topic. As necessary for explanation and as applicable, an ASC topic may be followed with a two-digit subtopic, a two-digit section or a two-or-three-digit paragraph. Derivative Instruments: ASC 815, “Derivatives and Hedging,” 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, we record the fair value of the conversion shares, remove the fair value of the related derivative liability, remove any discounts and record a net gain or loss on debt extinguishment. Warrant Liability: The Company accounts for the Series C warrants issued in November 2025, in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies these warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. This liability is re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of these warrants is estimated using a Monte Carlo simulation model. Such warrant classification is also subject to re-evaluation at each reporting period. Prepaid expenses – current portion and long-term portion consist primarily of costs paid for future services which will occur between 1 month to three years. Prepaid expenses principally include prepayments in fully vested, non-forfeitable equity instruments for general consulting, investor relations, and business advisory services, which are being amortized over the terms of their respective agreements. Recent Accounting Pronouncements Please see section captioned “Recent Accounting Pronouncements” in Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a discussion of recently issued and adopted accounting pronouncements. 7 Going Concern Qualification We did not generate any revenue for the nine months ended March 31, 2026 and 2025 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, 2025 and 2024. In addition, we have negative working capital and convertible debt that is past maturity that we are currently negotiating with lenders in order to amend the maturity dates. The foregoing raises substantial doubt about our ability to continue as a going concern for a period of 12 months from the issue date of this report. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds and/or to consummate a public offering. Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity and/or convertible debt financing. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The “Going Concern Qualification” might make it substantially more difficult to raise capital. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable to smaller reporting companies.